‘Reciprocity’ Seems to be the Trade Policy Word of the Day

2009-07-06

China's government and companies should learn to apply the World Trade Organization dispute settlement mechanism in a "rational" and "practical" manner to protect interests of companies and deal with complaints, an official said yesterday.

Lu Xiankun, China's counselor to the WTO, said at a conference in Shanghai that protectionism and trade friction was on the rise globally because of the economic slowdown. Much of it was targeted at China, which would adversely affect Chinese exporters.

He said the world trade environment proved tougher for Chinese exporters, with more possibilities for China to file suits. Meanwhile, China could be expected to face more complaints with its stimulus measures causing concern abroad. [Shanghai Daily]

OK, first off, there is very little in trade policy or dispute settlement that is "rational" or "practical," so you can forget about that. Trade policy is inherently political, and WTO dispute settlement is a political excercise. Private trade disputes are a mixed bag, with some areas, such as anti-dumping, being dominated by political concerns.

So what is Lu Xiankun trying to say here? Basically that the international trade environment is not a nice place these days (absolutely true), disputes are on the rise (yes), and that Beijing and many Chinese companies are prime targets of a variety of nations (of course).

The key language here is "possibilities for China to file suits." China's foreign policy for many years has highlighted the concept of reciprocity. If there's an increase in anti-dumping cases against Chinese companies, then China will ramp up anti-dumping cases here against foreign companies. Ban certain Chinese imports for quality/health reasons? China will find some products from the same country and ban them on similar grounds. And so on.

International trade is all about reciprocity, in fact it is one of the founding principles of the GATT/WTO. This is one reason why so many folks are worried about today's international trading environment. The kind of language quoted above does little to allay my fears, I can tell you that.

Tags: International Trade