World Economy

WTO Chief Warns of Trade War

WTO Chief Warns of Trade WarWTO Chief Warns of Trade War

There is a “clear” risk of a trade war happening because of protectionist policies, the World Trade Organization chief Roberto Azevedo said.

The WTO director-general did not implicate any countries by name behind such policies, even though he was asked about the effects US President Donald Trump’s “America First” stance could have on the global trading system, AFP reported.

“The risk of a trade war is very clear,” Azevedo told reporters during a visit in Panama on Wednesday.

“Once a country, whichever one, applies unilateral measures, there is a response from others and we could see a domino effect,” he said. “The reality is that, at the end of the process, if we have a trade war everybody without exception will be worse off than when it starts.”

Since entering the White House, Trump’s administration has talked about the US trade deficit vis-a-vis several countries, notably China and Mexico. The president has said he is prepared to tear up the NAFTA free trade deal with Canada and Mexico. On Wednesday, reports said the US was looking at probing China for unfair trade practices.

Azevedo was in Panama for meetings with government officials and business representatives. “The problem we have is a global problem: we have an economy not growing sufficiently fast and that gives rise to temptations of unilateral protectionist actions,” he said.

 China Warns of Countermeasures

Meanwhile, Chinese officials and experts on Thursday strongly criticized a potential investigation that the US government is said to be launching into China’s trade practices and warned that any unfair measure against China would draw a strong response and inflict damage on both economies.

Experts also urged relevant government agencies and industries to prepare countermeasures, including filing complaints at the WTO and tit-for-tat probes into US companies and products, to protect their interests from what they describe as “bullying” from the US.

The US government is reportedly mulling opening a broad investigation against China’s trade practices, under a domestic law known as Section 301 of the Trade Act of 1974. The investigation, which could come in the coming days, could result in steep tariffs or restrictions on Chinese imports, according to US media reports.

Such prospects drew strong criticism and stern warnings in Beijing on Thursday.

The experts said China has a lot of tools at its disposal to counter the US. Should the US take unfair measures against Chinese companies and products, such as imposing higher tariffs and restrictions on imports, China could do the same for US companies and products, said Mei Xinyu, an associate researcher at the Chinese Academy of International Trade and Economic Cooperation.

“This could cause chaos in both countries’ economies and markets,” noted Mei.

Another option for China would be using the WTO mechanism to protect its legal interests, according to Huo Jianguo, vice chairman of the China Society for World Trade Organization Studies,  who also participated in negotiations for China’s entry into the WTO.

“Though the process should take a long time, it’s an ideal way to protect our interests while avoiding further confrontation.”

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