News headlines these days seem to suggest that tension is running high. U.S. President Donald Trump decided to impose steep tariffs on steel and aluminum imports and the U.S. Trade Representative has just published a proposed list of Chinese products worth approximately $50 billion that could be subject to additional tariffs. Fears of a potential trade war caused financial markets to respond nervously and have brought a greater sense of uncertainty to global economy.
Lets first get the facts straight. Most of American steel and aluminum imports are middle- and lower-end products for civilian purposes. Many World Trade Organization members, including the EU, have pointed out that their exports do not harm American national security at all.
The “Section 301” report by the Office of the U.S. Trade Representative, on which the administration bases its actions, fails to reflect what is really happening in China. Thus, the proposed measures disregard WTO rules and the wishes of business communities. The U.S. moves are typically unilateral and protectionist and set a very bad precedent.
Lets put this into the global perspective. The international community has a long-standing commitment to a multilateral trade system that is open, equitable and beneficial to all, to trade and investment liberalization and facilitation, and to prosperity for all countries. This is why all WTO members commit to substantial tariff cuts. This is also why all members pledge that, should any dispute or friction occur, they will not seek unilateral actions that may heighten confrontation but will rather seek remedies through the dispute settlement system, and observe its rules and its rulings.
The U.S. has turned its back on these globally recognized rules and its own commitments. Its protectionist moves under the pretext of national security will undermine the credibility of the WTO-centered multilateral trade system and the rules-based global trade order.
China has just announced its planned measures of equal intensity and equal scale. We are resolute in safeguarding our legitimate rights and interests. If every player yields to might and gives up what is right, or even pursues its own interests at others expense, global trade would get out of order and return to the “law of the jungle.” If that happens, everyones interests would be hurt, including the EUs.
WTO Director General Roberto Azevêdo has said that disrupting trade flows will jeopardize the global economy and that actions outside collective processes will greatly increase the risk of confrontation escalation.
Azevêdo also called for restraint and urgent dialogue as the best path forward to resolve problems. I cannot agree with him more. China, as the second largest economy, will demonstrate a strong sense of responsibility and develop healthy trade ties with other players on the basis of mutual respect and mutual benefit. China will make unwavering efforts to build an open economy and share benefits with others in the course of opening up.
In a world of great uncertainties, a stable China-EU relationship is an invaluable asset. China and the EU, as major members of the WTO and comprehensive strategic partners, should take a clear stance against protectionism, jointly preserve the rules-based multilateral trade order and keep the global economy on a sound and sustainable track. This is a joint responsibility. China and the EU must act together to make that happen.
Zhang Ming is head of the Mission of the Peoples Republic of China to the European Union.