China and US rule out 'trade war'

• Source: Global Times
• [08:06 September 16 2009]
• Comments

By Liang Chen

China and the United States have continued to exchange words defending their retaliatory measures in their latest trade row, while offering assurance that neither want to see a trade war.

At a press conference Tuesday, the Ministry of Commerce (MOC) refuted Washington's accusation of violating WTO agreements by flooding the US market, and said China's US-bound tire exports actually declined in the first half of 2009, not disrupting the US market, as Washington had claimed.

The comment came shortly after the Bloomberg news agency yesterday quoted US President Barack Obama as saying, "We have rules on the books," while downplaying the possibility of the two nations beginning a trade war.

MOC spokesman Yao Jian said Obama's decision last week to raise duties on Chinese imported tires is an abuse of special safeguard measures, and "sends a wrong signal to the world amid the financial crisis."

However, Yao downplayed the possibility of the two countries waging a trade war, saying, "We don't want to see individual trade remedy cases hurt bilateral trade and the economic relationship."

China's tire exports to the US rose by 2 percent in 2008, but fell by more than 15 percent in the first half of 2009, according to MOC data.

"The conclusion that China's exports are distorting the US market does not stand," Yao said, insisting that US tire manufacturers did not join the petition, which was brought by the United Steelworkers union.

Some of the largest US tire companies did not take part in the petition for relief from Chinese tire imports. Goodyear, the largest US tire maker, stayed neutral, while Cooper, the second-largest US tire maker, opposed the petition, Bloomberg reported yesterday.

Safeguards can be applied if a surge in imports hurts US manufacturers, and once invoked on a specific product, other countries may follow and implement the same punishment, Bloomberg said.

Yao's comments came after Obama expressed his hope in an interview with Bloomberg Monday, in which he said, "We're not going to see a trade war."

Obama admitted "there are some tensions around this," but defended his stance by saying, "My message is very simple: We have rules on the books."

He argues that the enforcement of the existing trade rules is "to build support among lawmakers and the American public," while Stephanie Lester, vice president of the Retail Industry Leaders Association, which also represents companies such as Wal-Mart and Target, criticized Obama's move as "a bow to political pressure," according to Bloomberg.

When asked what he would say to Chinese President Hu Jintao at the G20 summit next week in Pittsburgh, Obama said, "We've got to establish credibility and enforcement of the rules precisely because I want to further expand trade."