Hi Joel, a fair editorial from FT on the subject
news.ft.com
QUOTE
Editorial comment: China retaliates
Published: June 24 2001 17:44GMT | Last Updated: June 24 2001 17:46GMT
China's trading partners should be warned. Beijing will robustly defend its interests when it joins the World Trade Organisation, possibly by the end of this year. Its recent imposition of punitive tariffs on a range of Japanese imports, in retaliation against increased Japanese tariffs on vegetables from China, suggests China's trade mandarins are taking a more assertive stance now that WTO entry is in sight.
Neither side can take pride in its conduct but Japan's actions are particularly reprehensible. Technically, its decision in April to slap punitive duties on shiitake mushrooms, spring onions and other imports from China may be compatible with WTO rules. However, it is inexcusable. Once again, a Japanese government has caved in to the protectionist demands of small farmers, influential supporters of the ruling Liberal Democratic party: this time, it is because it needs their loyalty in a difficult Upper House election next month.
Economically, Japan is shooting itself in the foot. Much of the produce hit by the new duties is grown on farms owned by Japanese trading companies, which have been encouraged to invest in China by its low production costs. Penalising them is also a slap in the face for Japanese consumers, who must now pay more for staple ingredients of their national diet.
This incident reflects poorly on the Koizumi government's commitment to reform. It is a dismal reminder that the steady decline in the size of Japan's farming population has not diminished its power to frustrate agricultural liberalisation - an issue that will be at the centre of any future world trade round. Furthermore, the affair sends all the wrong signals to China, as it prepares to grapple with the huge task of implementing WTO rules and disciplines.
Meeting WTO commitments will require Beijing to stand up firmly to protectionist forces at home. That will not be made easier when Japan, a self-professed champion of multilateralism, capitulates so easily to special interests in the hope of currying electoral favour. It is all the more regrettable that the affair coincides with US threats to appease protectionist domestic lobbies by curbing steel imports.
If the WTO's biggest members want China to embrace free market principles and live by global rules, they must lead by example. Japan should scrap its punitive tariffs on Chinese goods. It should do so no later than this autumn, when the duties are due to be reviewed. Otherwise, there is a risk that the dispute will escalate and end up costing both sides - and the world trade system - far more than the trivial economic interests at stake.
UNQUOTE |
