China and the EU Have a Joint Responsibility to Uphold the Rules-based Multilateral Trade Order
News headlines these days seem to suggest that tension is running high. The US administration decided to impose steep tariffs on steel and aluminum imports. President Trump is seeking to take actions on up to US$60 billion worth of Chinese products. Fears of a potential trade war caused financial markets to respond nervously, and have brought a greater sense of uncertainty to global economy.
Let’s first get the facts straight. Most of American steel and aluminum imports are middle- and lower-end products for civilian purposes. Many WTO members, including the EU, have pointed out that their exports do not harm American national security at all. Separately, the Section 301 Report’s findings fail to reflect what is really happening in China, and the proposed actions disregard WTO rules and the wish of business communities. The US moves are typically unilateral and protectionist, and set a very bad precedent.
Let’s then put it into a global perspective. From GATT to WTO, the whole 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 common prosperity for all countries. This is why all WTO members commit to substantial tariff cuts. This is why, all members pledge, should any dispute or friction occur, not to seek unilateral actions that may heighten confrontation, and rather, to seek remedies through the dispute settlement system, observe its rules and its rulings.
However, the United States turns its back on these globally recognized rules and its own commitment. 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. 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 “law of the jungle”. If that happens, everyone’s interests would be hurt, including the EU.
WTO Director-General Roberto Azevêdo said that disrupting trade flows will jeopardize the global economy and that actions outside collective processes will greatly increase the risk of confrontation escalation. DG 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 each other’s comprehensive strategic partner, 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 of China and the EU. We must act together to make that happen.