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China-US relations

‘Tit-for-tat’ trade war with China could hurt US companies: former top US negotiator

Former United States Trade Representative Michael Froman says US probe into China’s alleged intellectual property theft could spiral into nasty trade war

PUBLISHED : Thursday, 14 December, 2017, 8:04am
UPDATED : Friday, 23 March, 2018, 1:07pm

The US should avoid a “tit-for-tat” trade war with China because it could hit US companies through higher costs, disrupted supply chains and battered consumers, a former top US trade negotiator has warned.

Former United States trade representative Michael Froman said in Washington on Wednesday that a US investigation into China’s alleged intellectual property theft could widen the countries’ differences and lead to a trade war.

The US is investigating the allegations under Section 301 of the Trade Act, raising the possibility of unilateral US action if the probe supports the claims.

Both countries are members of the World Trade Organisation and, under WTO rules, the US and China cannot unilaterally impose punishing tariffs against each other without first taking their case to the trade organisation’s dispute settlement unit, a process that can take two years to complete.

Froman, former US president Barack Obama’s chief trade negotiator from 2013 to 2017, told a Centre for Strategic and International Studies event that there was a sense that the administration of US President Donald Trump would push for unilateral tariffs on some Chinese imports without going to the WTO, risking retaliation by China.

China accuses US of starting a trade war if it ignores the WTO

If the US were to start violating its WTO obligations by hitting China selectively and unilaterally with punitive measures, the move could inspire similar action by other countries, he said.

“We don’t want other countries to act unilaterally,” Froman said.

The Trump administration has taken a bilateral approach to trade disputes with other countries, describing the WTO’s multilateral platform as “a disaster”. Trump also warned in July in an interview with NBC News that the US could pull out of the trade organisation.

Trump launches US probe into ‘unlawful’ China trade practices, raising spectre of trade war

The White House took aim at the trade group again on Monday, with Trump’s chief trade negotiator Robert Lighthizer saying it had lost its essential focus and become a litigation-centred organisation.

“Too often members seem to believe they can gain concessions through lawsuits that they could never get at the negotiating table,” Lighthizer said at the opening session of a WTO ministerial meeting in Buenos Aires, Argentina. “We have to ask ourselves whether this is good for the institution and whether the current litigation structure makes sense.”