Rooting out the Causes of Trade Friction

I am a staunch supporter of free trade. When the financial crisis was spreading far and wide， trade protectionism did not dissipate; rather， it got worse. All countries should be fully alarmed by such a development，” said Chinese Premier Wen Jiabao on March 14， in reply to a journalist at the press conference.

The global financial crisis has indisputably aggravated trade protectionism. In 2009， trade friction China encountered amounted to more than 100 cases， valued at US $12 billion， both record highs.

Changing the Trade Itself

On January 6， 2010， the US Department of Commerce declared that it would impose preliminary anti-dumping duties of between 43 percent and 289 percent on steel laminates valued at US $300 million imported from China. By the end of February， several countries， such as the United States， members of the European Union， India， and Argentina， declared anti-dumping investigations on Chinese products， or went ahead and imposed anti-dumping duties. Nine cases involved products such as steel laminates and copperplate paper. The frequency of trade friction is higher than the previous year.

To this form of anti-dumping lawsuit and disputes over intellectual property rights， Wan Jifei， president of the China Council for the Promotion of International Trade (CCPIT)， observes that trade disputes appear to have become a new tool of trade protectionism. He commented， “Objectively speaking， since reform and opening-up the total volume of China’s foreign trade confirms rapid growth， and it is normal under this condition to see an increase in trade friction. On the other hand， international trade protectionism is clearly emerging.”

During an exclusive interview granted to China Today Wan Jifei said that China is facing such a situation: there is an obvious continuity to the encounters with problems in trade. In the export of iron and steel， shoes， toys， aluminum products and tires which are the traditionally advantageous exports， a particular phenomenon has occurred frequently: trade remedy investigations are conducted on one product in different markets， forming a chain of disputes spreading across more countries， with remedy measures stacking up. Due to the rapid development of China’s foreign trade， more and more anti-dumping lawsuits and intellectual property rights disputes involve Chinese enterprises.

China has replaced Germany to conduct the highest volume of foreign trade， according to Wan Jifei， but most of its exports are labor-intensive products， and its foreign trade is still in the stage of expansion. China is typical of a“country big in manufacturing and small in brand names.” Such a rampant growth arouses trade friction. Therefore， “the best way to address root causes is to change the growth mode of China’s foreign trade， and follow a path of invigorating trade through science and technology， and market diversification.” Wan Jifei said， “We should accelerate strategic change by promoting the shift of labor-intensive industries from low-tech content to hi-tech content. This is a fundamental approach to managing the change from a big trade country to a strong trade country， and will effectively resolve future trade friction.”

Laying the Investment Groundwork

It is impossible for China to change the growth mode of its foreign trade in one go. But the lawsuits arising may drag Chinese enterprises into long-drawn-out process of investigation， evidence collecting and pleading.

Wan Jifei suggests Chinese enterprises come up to speed on intellectual property rights coupled with research and investigation of international markets ripe for overseas investment. Anticipation and avoidance of conflict is entailed in this approach.

In 2009， the global economy declined sharply， and the investment environment was transformed， including shakeups in various main investment destinations and opportunities. In recent years， the China Council for the Promotion of International Trade has done a great deal during this economic crisis to help Chinese enterprises to keep abreast of readjustments in investment policies in relevant countries. Knowledge of investment opportunities effectively strengthens control of risks， and increases efficiencies.

“For instance， we inform Chinese enterprises of the latest policies and legislation in target countries， developments in the international investment environment in general， associated relevant policies and investment opportunities. This intelligence assists policy-makers to absorb the experiences of advanced enterprises in the transnational world， to familiarize themselves with and utilize the professional services of investment service organizations. The strategy is to improve chances of coping with the financial upheaval and explore commercial opportunities that surface.”

In addition， the CCPIT also uses various means， including conventions and exhibitions， foreign liaisons， and information and legal services， to promote international trade， attract investment， and smooth economic cooperation.

Wan Jifei said， “Our short-term objective is to help enterprises to find more trade opportunities; the intermediate and long-term goals are to help enterprises increase their capacity to produce independent brand names and technologies， eventually guiding enterprises from a ‘made in China’ mode to an ‘invented in China’ mode.”

Many Fronts

Facing trade friction， the CCPIT uses its advantage of having extensive ties with chambers of commerce in various countries to remove doubts and increase mutual trust.

To reduce Sino-US trade disputes， the CCPIT has held various activities， such as the “Sino-US Entrepreneur Roundtable Conference” and “Sino-US Forum of Provincial Governors，” providing platforms for entrepreneurs to communicate. It has perfected the mechanism of Sino-US Business Dialogue， keeps close contact with relevant organizations and multinationals， to promote healthy development of relations between the two countries. With regard to trouble plaguing textile exporters to the US， and business visas， the CCPIT sent several letters to the leaders of the US Chamber of Commerce to convey the appeals and demands of affected Chinese enterprises.

The CCPIT has also expanded international exchanges and cooperation vehicles related to trade arbitration and business mediation， and has established the Sino-US Business Mediation Center. Multilateral conferences such as the China International Credit Risk Management Conference made a successful debut. “To date， the CCPIT has established 27 multilateral and bilateral trade and economic mechanisms， and 24 bilateral (entrepreneurs) business dialogues; the task of building platforms for international exchange and cooperation operates in an all-dimensional， multi-tiered and wide-ranging pattern，” said Wan Jifei.

He told this reporter that the CCPIT will also serve as a broader stage for China’s overall economic development. In 2009， CCPIT branches at various levels gave suggestions to a range of enterprises coping with the financial crisis， and actively won credit and funding for them， specifically a government fund valued at RMB 758.9 million (Small and Medium-Sized Enterprise International Market Development Fund). Meanwhile， it provides legal services， mediation and arbitration for those determined to meet the challenges.

“In the days to come， the CCPIT through these services will continue to help the government and enterprises put these difficulties behind them. It will also undertake search for new solutions to international trade friction， and promote adoption of a new management mode featuring a systemic approach to facilitating preferential treatment in international trade: centralized evaluation of credentials and a systemic approach to authorization will accelerate the entry of more enterprises into solid trade relationships，” explained Wan Jifei. In 2010， the CCPIT will hold the EU-China Business Summit， the China-ASEAN Business and Investment Summit， the China-Latin America Business Summit， and the APEC SME Summit， as well as Sino-French， Sino-Canadian and Sino-US bilateral cooperation forums. Enterprises exploring both new and traditional markets can rely on vigorous backing.