China ramps up pressure on Trump

opinion September 14, 2018 01:00

By The Nation

2,834 Viewed

World Trade Organisation sanctions on Washington could tilt the trade dispute in Beijing’s favour



A US-China trade war has been brewing in recent weeks with China due to seek approval from the World Trade Organisation (WTO) on September 21 to impose sanctions on the United States following President Donald Trump’s series of threats to impose hefty tariffs on Chinese imports.

Regarding Thailand, the implications of this trade war are likely to be minimal at this stage, with some sectors gaining and some losing.

So far, the US has imposed a 25 per cent tariff on Chinese imports totalling US$50 billion. That is a relatively small amount of total US-China trade, so the impact on the global supply chain, which includes manufacturing industries in Thailand, is expected to be small. However, Trump has repeatedly threatened to slap hefty tariffs on other Chinese imports. The US leader has mentioned another US$200 billion worth of Chinese imports – and all other Chinese imports to the US market – but analysts believe the administration will change course and the situation will shift after the US mid-term elections in November.

By then, there is a strong likelihood that the trade dispute will be back on the negotiating table, just as the Trump administration has been in talks with Canada and Mexico over the North American Free Trade Agreement and with other major trading partners over their extant arrangements.

As a result, any significant impacts on Thailand and other countries in the global supply chain are likely to be felt only if the US-China trade war escalates to a point where a much bigger portion of the bilateral trade between the world's largest and second largest economies is affected. That would prompt a fresh round of restructuring in the global supply chain, both in Asia and in other parts of the world.

So far, both Beijing and Washington have been more or less cautious, testing each other strategically. Neither side wants to get locked in a prolonged economic dispute that would have the potential to spill over into the geo-political arena, as evidenced by the latest summit between presidents Xi Jinping of China and Vladimir Putin of Russia.

China has resorted to the WTO in a bid to build international pressure on the US, which it says has failed to comply with an earlier WTO ruling regarding its anti-dumping duties on Chinese imports. That dispute dates back to 2013, when China filed its complaint against the US measure imposed by then-President Barack Obama.

The US under Trump has even threatened to withdraw from the WTO, which is under pressure to shape up as a result of America’s loss in this dispute. The Chinese offensive via the WTO dispute-settlement mechanism follows Trump’s unilateral trade measures against its major trading partners. The European Union, Mexico, Canada, Japan and other allies have all been targeted as Trump asserts that the US has “for too long” been taken advantage of economically by other nations.

In fact, the US was the architect of global free trade and the monetary system put in place at the end of World War II, establishing the World Bank, the International Monetary Fund and the agency that evolved into the WTO. The current leader in Washington, though, has turned to unprecedented measures that could wreak havoc on the global trade system.