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WTO chief says trade restrictions alarming

By Li Jiabao  (China Daily)

13:19, June 19, 2012

Experts are calling for more efforts to reduce trade frictions that have emerged in the current sluggish economic climate while emphasizing China's contribution to fixing the trade imbalance.

For the first time since the World Trade Organization started monitoring the protectionist reaction to the financial crisis in 2008, Director-General Pascal Lamy told an informal meeting of ambassadors of delegations to the WTO on June 7 that the rise in trade restrictions is now "alarming", and the accumulation of these trade restrictions is now a serious concern.

The implementation of new measures potentially restricting trade has remained unabated over the past seven months, and this has been further aggravated by the slow pace reforms of existing measures, Lamy said.

"It is a natural phenomenon that major economies take protectionist measures during a global economic slowdown. But the underlying reason is the domestic political situation and employment. The increased trade frictions this year are closely related to the simultaneous elections in major economies," said Zhang Yuyan, director of the Institute of World Economics and Politics affiliated with the Chinese Academy of Social Sciences.

"China's fast development in the past decades has left it frequently targeted in trade frictions though China has made great efforts in reducing the trade surplus, the major reason for trade disputes," Zhang said.

During the first four months of 2010, developing countries initiated the largest number of new investigations. China was the country most targeted by these initiations, according to a WTO report reviewing trade-related developments from Nov 1, 2009, to mid-May 2010.

Chinese exports received 69 trade investigations in 2011, involving an export value of as much as $5.9 billion, according to Li Yizhong, head of the China Federation of Industrial Economics.

"Chinese exporters now need to enhance core competitiveness. Most of our exporters are still labor or resource-intensive ones, and only about 10 percent have proprietary intellectual property rights," Li said.

Chen Fengying, director of the Institute of World Economic Studies at the China Institutes of Contemporary International Relations, said China now has the full ground to fight the investigations under WTO rules.

China is expected to receive market economy status in 2016, which will reduce the trade frictions against it, according to Chen.

"China's trade surplus may account for less than 2 percent as a share of GDP this year, and the near future will see a balanced trade in the world's second-largest economy," Zhang said.

"More efforts should be given to advance and promote free trade, which is the fundamental way for world benefits. Each participant can gain from free trade," Zhang said.

Zhang called for major economies to jointly establish a new methodology for calculating the trade surplus because some exports are merely processed or assembled in China, and the current statistical method did not reflect the full picture.

"The establishment of regional free trade agreements will be another effective way to reduce trade frictions when the Doha Development Agenda negotiations cannot make breakthrough in the short term," Zhang said.

China kicked off FTA negotiations with the Republic of Korea in early May, and a free trade agreement involving China, Japan and the ROK is expected to start in November during the East Asia Summit.

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