Eliminate unilateralism in trade

Yomiuri Shimbun Editorial Board

Neither country should embark on a fruitless trade war. Realizing their responsibility to underpin the international economy and trade system, both the United States and China should strive to find a solution that will not give rise to turmoil.

The United States unveiled a draft list of punitive duties on Chinese goods, as Washington views China’s infringement of intellectual property rights as problematic. The list covers about 1,300 items, which center on high-tech products, representing more than ¥5 trillion in Chinese goods.

China plans to implement retaliatory measures, on the same scale, involving U.S. products. Beijing unveiled a list of duties on 106 key U.S. products, including soybeans, automobiles and aircraft.

The latest moves came on the heels of similar actions taken by the two countries: The United States took steps to restrict steel and aluminum imports, while China implemented retaliatory duties on more than ¥300 billion in 128 items of U.S. goods, including pork.

Intensifying trade frictions would inflict a major blow on both economies. The bilateral discord between the United States and China, which make up a combined 40 percent of the world economy, would inevitably effect the global economy as a whole.

Taking into account their positions as economic powers, both countries have to do their utmost to avert a game of tit for tat.

The infringement of intellectual property rights in China is a deep-rooted issue pointed out also by Japan and the European Union.

The Chinese government strictly regulates foreign capital in such key industries as automobiles. Foreign companies advancing into the Chinese market have been effectively forced to transfer their technology to Chinese companies and other entities.

Companies of developed economies cannot ignore the fast-growing, mega market of China. China’s heavy-handed restrictions take shrewd advantage of trade partners’ weak points. Such restrictions can also be considered to be fundamentally the same as the methods taken by U.S. President Donald Trump, in that they are devoid of the spirit of reciprocity.

The Chinese government regards itself as a defender of free trade in the U.S.-China trade friction. This situation was created by the shallow thinking of Trump, who disregards international trade rules and focuses on bilateral trade.

To rectify China’s infringement of intellectual property rights, it is essential for developed countries to strengthen their cooperation. In dealing with the problems concerning the transfer of technology, Japan, the United States and European countries have discussed making a joint appeal to the World Trade Organization. These efforts should be promoted steadily.

The WTO was inaugurated in 1995 with the objectives of trade liberalization and establishment of international trade rules. Lying behind the creation of the world body was reflection that the establishment of trading blocs in the world economy was one factor that had brought about World War II.

As the member countries increased in number, however, its decision-making on such matters as mapping out new rules has become difficult. The WTO’s dispute-settling procedures, which are implemented after an appeal has been made to the WTO by a member country, often take at least several years – as a result, its effectiveness in avoiding trade friction is limited.

To stem the spread of protectionism in trade, WTO reforms are also unavoidable. Japan, which attaches importance to the promotion of free trade through the WTO, will be responsible for taking the lead in such discussions.

© 2018, The Japan News/Yomiuri