News By/Courtesy: Ritwik Guha Mustafi | 02 Apr 2020 15:44pm IST

HIGHLIGHTS

  • Allegations of unfair trade practices on China
  • Trade barriers and tariffs have been imposed on China
  • China perceives that US wants to stop its rise as a global power

'No nation was ever ruined by trade and free trade tends to spur economic growth'. Two of the largest economies in the world- The United States and China are currently locked in an increasingly bitter row over trade deals, with both sides threatening to hike tariffs on their respective imports [1]. 

With the United Nations-China Relations Act of 2000, China was allowed to join WTO in 2001 and was given a most favoured nation (MFN) status [2]. The Chinese were however accused of not following the global trade rules and endangering the protection of Intellectual Property Rights. Among the key issues were that China was a major source of pirated musical compact disks and video laser disks, along with virtually all the computer software sold in China. On intellectual property rights, there was no enforcement of China's written laws, and as a result the piracy and theft of American-produced music, videos and software was costing American companies $1 billion a year by 1994 ($1.73 billion in 2019 dollars) [3].

President Trump has frequently advocated tariffs to reduce the US Trade deficit and promote domestic manufacturing, saying the country was being "ripped off" by its trading partners, and imposing tariffs was a major plank of his presidential campaign [4]. President Donald Trump in 2018 began setting tariffs and other trade barriers on China with the goal of forcing it to make changes to what the U.S. says are "unfair trade practices" especially the theft of Intellectual Property Rights [5]. 

The European Commission filed a complaint with the World Trade Organization over these rules in 2018, arguing that foreign companies are forced or induced to transfer IP to their Chinese partner, and establish research and development in China, as "performance requirements" to receive government approval in sectors such as electric vehicles. The EU believes that this violates WTO rules requiring fair treatment of domestic and foreign companies [6].

The Chinese government has denied forced transfer of IP is a mandatory practice, and acknowledged the impact of domestic R&D performed in China [7]. The Chinese government has blamed the American government for starting the conflict and said that U.S. actions were making negotiations difficult. They say the trade war has had a negative effect on the world and that the U.S. government's real goal is to stifle China's growth [8].

Both countries are currently in a cycle of imposing high tariffs and relaxing/halting their policies. This trade war has seen a lot of criticism from the International community. Both countries have claimed to have reached an agreement and have given certain tax exemptions. But this war is far from being over. There has to be clarity in demands and policies of both sides to achieve an off-ramp and concerted efforts in direction of unrestricted trade is required so as to prevent any  political and/or economical harm to either country.

References:-

1.) Jon Rogers, TRADING BLOWS :Donald Trump’s trade war with China explained, THE SUN (April 2, 2020, 04:00 P.M.), https://www.thesun.co.uk/news/9082139/us-china-trade-war-trump-jinping/

2.) Reihan Salam, Normalizing Trade Relations With China Was a Mistake, THE ATLANTIC (April 2, 2020, 04:03 P.M.), https://www.theatlantic.com/ideas/archive/2018/06/normalizing-trade-relations-with-china-was-a-mistake/562403/

3.) Edward A. Gargan, U.S. May Thwart China's Trade Goals, THE NEW YORK TIMES (April 2, 2020, 04:05 P.M.), https://www.nytimes.com/1994/07/24/world/us-may-thwart-china-s-trade-goal.html?searchResultPosition=1

4.) Jim Zarroli, As U.S. Flexes Its Muscles On Trade, Other Countries Are Beginning To Push Back, NPR.ORG (April 2, 2020, 04:07 P.M.), https://www.npr.org/2018/06/08/618242932/as-u-s-flexes-its-muscles-on-trade-other-countries-are-beginning-to-push-back

5.) Ana Swanson, Trump’s Trade War With China Is Officially Underway, THE NEW YORK TIMES (April 2, 2020, 04:09 P.M.), https://www.nytimes.com/2018/07/05/business/china-us-trade-war-trump-tariffs.html

6.) Philip Blenkinsop, EU expands WTO case against Chinese technology transfers, REUTERS (April 2, 2020, 04:14 P.M.), https://www.reuters.com/article/us-eu-china-wto-idUSKCN1OJ1AP

7.) Tom Miles, U.S. and China clash over 'technology transfer' at WTO, REUTERS (April 2, 2020, 04:11 P.M.), https://www.reuters.com/article/us-usa-trade-china-idUSKCN1IT11G

8.) Evelyn Cheng, The US has backtracked’: China releases official document blaming America for the trade war, CNBC (April 2, 2020, 04:16 P.M.), https://www.cnbc.com/2019/06/02/china-releases-official-document-that-blames-america-for-the-trade-war.html

Section Editor: Pushpit Singh | 04 Apr 2020 21:58pm IST


Tags : Trade, tariffs, barriers, unfair, allegations

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