Unit 52. Text I The Coming Trade Wars

【Unit 5】Text I The Coming Trade Wars

Warm-up

? The following news has made headlines in a number of major newspapers

recently.

13 March, 2012--The US, Japan and the European Union have filed a case against China at the World Trade Organization, challenging its restrictions on rare earth exports. US President Barack Obama accused China of breaking agreed trade rules. They argue that by limiting exports, China, which produces more than 95% of the world's rare earth metals, has pushed up prices. Beijing has set quotas for exports of rare earths, which are critical to the manufacture of high-tech products from hybrid cars to flat-screen TVs.

Beijing has denied the allegations in the WTO case, saying that it enforced the quotas to ensure there was no environmental damage caused due to excessive mining. China's Industry Minister, Miao Wei, told state media agency Xinhua that the country was \complaints and denied the quotas were trade protectionism. Chinese foreign ministry spokesman Liu Weimin said: \rules. Exports have been stable. China will continue to export, and will manage rare earths based on WTO rules.\

? What kind of organization is WTO? What kind of role does it play in settling

disputes in international trade?

The World Trade Organization is an international organization designed to supervise and liberalize international trade. The organization officially commenced on January 1, 1995 under the Marrakech Agreement, replacing the General Agreement on Tariffs and Trade (GATT), which commenced in 1947. The WTO’s procedure for resolving trade quarrels under the Dispute Settlement Understanding is vital for enforcing the rules and therefore for ensuring that trade flows smoothly.

? Name the recent cases of trade conflicts that you know, and find out the

major complaints.

In 2009, Washington expanded sanctions against European food products in retaliation for Europe's boycott against hormone-treated American beef.

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【Unit 5】Text I The Coming Trade Wars

After the 2008 financial crisis, U. S, government initiated a bailout plan of GM and Chrysler to the exclusion of foreign firms. As a response, E.U. accused U. S. of violating the so-called \treatment\trade agreements, and put Washington on notice that it will pursue legal trade remedies if the final bailout package was discriminatory.

? In an article entitled ―The Dangers of Turning Inward‖, Jeffrey E. Garten,

the author of ―The Coming Trade Wars‖ (Text I), alarms us of the danger of economic protectionism, which is to be differentiated from ―ordinary protectionism‖?

Ordinary protectionism such as tariffs and quotas would be one aspect of this problem, but it won't be the worst of it because a web of treaties and the enforcement capabilities 执法能力of the WTO will constrain the most egregious过分的 behavior. Economic nationalism is more insidious 暗中为害的because it is broader, more subtle and subject to fewer legal constraints. It is a frame of mind that casts doubt on the very assumption that we live in a single international market, and that relatively open borders are a virtue.

It is based on a calculation that despite all the talk about economic interdependence, nations can go it alone, and could be better off in doing so. True economic nationalists want above all to protect capital and jobs in their own countries. They see global commerce not as a win-win proposition but as a contest in which there is a victor and a loser. They are thus not focused on international agreements to open the world economy; to the contrary, they are usually figuring out how to avoid international commercial obligations.

? Despite the increasing pace of globalization, recent years witnessed a reverse

trend of protectionism in international trade. For instance:

In 2009, E.U. reintroduced export subsidies on butter and cheese and levied tariffs on American exports of biodiesel fuel. India raised tariffs on steel products. Brazil and Argentina pressed for a higher external tariff on imports into Mercosur.

In 2010, USA filed 2 cases in World Trade Organization against China over Electrical Steel and Credit Card payment providers. USA alleged that China had

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【Unit 5】Text I The Coming Trade Wars

unfairly put duties on US made Steel and was locking out Mastercard and Visa from the credit card processing market in China.

The much-publicized \America\provision of the U.S. stimulus package restricted purchases of construction-related goods to many U.S. manufacturers. On October 11th 2011, America’s Senate passed the Currency Exchange Rate Oversight Reform Act, which would allow any “fundamentally misaligned” currency to be labelled a subsidy subject to countervailing duties. In other words, steep tariffs would be imposed on imports from nations with undervalued currencies. It was a provision aimed squarely at China's yuan.

? What are the regular protectionist measures?

Tariffs, import quotas, anti-dumping legislation, subsidy, currency manipulation, discriminatory government procurement歧视性政府采购, stimulus and bailout, administrative barriers行政壁垒 (restrictive import rules concerning such issues as food safety and environmental standard), etc.

? How does protectionism justify itself?

Protectionist policy justifies itself by claiming to protect national economy and domestic market, to retain jobs, to protect and support infant industries. Often, proponents of protectionism say that free trade is fine in theory, but it does not apply in the real world. Modern trade theory assumes perfectly competitive markets whose characteristics do not reflect real-world market conditions. Moreover, even though protectionists may concede that economic losses occur with tariffs and other restrictions, they often argue that noneconomic benefits such as national security more than offset the economic losses.

? What are the negative consequences of protectionism?

Sabotage free trade, lose jobs in the long run despite short-term gain, or to quote Alan Greenspan, protectionism will only lead to “an atrophy of our competitive ability. ... If the protectionist route is followed, newer, more efficient industries will have less scope to expand, and overall output and economic welfare will suffer”.

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【Unit 5】Text I The Coming Trade Wars

The Coming Trade Wars

The massive intrusion1 of government into national economics could spark disastrous protectionism.

Jeffrey E. Garten2

【1】It’s hard to find a top economic official, economist or global business leader who doesn’t recognize today’s heightened dangers of protectionism. But it is equally difficult to identify any high-powered3 efforts to actively ward4 off the prospect

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intrusion /?n?tru??n/: ~ (into/on/upon sth)

侵扰性的事物；扰乱；侵犯

1) something that affects a situation or people's lives in a way that they do not want ? This was another example of press intrusion into the affairs of the royals. 这是新

闻界侵扰王室成员私事的又一实例。

2) the act of entering a place which is private or where you may not be wanted 闯

入；侵入

? She apologized for the intrusion but said she had an urgent message. 她对迳自

闯进来表示道歉，但说她有紧急消息。

2

Jeffrey E. Garten: Jeffrey E. Garten is the Juan Trippe professor of international

trade and finance at the Yale School of Management and former undersecretary of commerce for international trade in the first Clinton administration.

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high-powered: adj.

盛的

1) (of people) having a lot of power and influence; full of energy 有权势的；精力旺? high-powered executives 劲头十足的行政人员

2) (of activities) important; with a lot of responsibility 重要的；责任重大的 ? a high-powered job 位高权重的工作

3) (also high-power) (of machines) very powerful 大功率的

? a high-powered car/computer, etc. 大马力的汽车、高性能的计算机等

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ward /w??d/ sb/sth off: to protect or defend yourself against danger, illness, attack,

etc. 防止，避免，使防止（危险、疾病、攻击等） ? to ward off criticism 受到批评后为自己开脱

? She put up her hands to ward him off. 她举起双手把他挡开。

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