To reject trade protectionism, actions matter

01 Jan 2009
Xinhua

BEIJING -- A free-trade agreement between China and Association of Southeast Asian Nations (ASEAN) took effect on the first day of the 2010, a solid move from the two sides to demonstrate their craving for and determination on cooperation and free trade while some other nations are looking to trade protectionism as savior of crisis.

Under the accord, China and six ASEAN countries - Brunei, Indonesia, Malaysia, the Philippines, Singapore and Thailand, will scrap tariffs on 90 percent of imported goods, covering 7,000 product categories. The other four ASEAN members, including Laos, Myanmar, Vietnam and Cambodia will follow suit in 2015.

The China-ASEAN Free Trade Area (CAFTA) covers a population of 1.9 billion from 11 developing nations. The bilateral trade totals4.5 trillion U.S. dollars and the combined gross domestic product hits six trillion U.S. dollars.

The operation of the CAFTA is the common wish for governments, enterprises and people, as the CAFTA promises a huge market for enterprises and a decline of products prices. China's general tariff stood at 9.8 percent in 2009 while that on imports from ASEAN was 2.4 percent.

As of Jan. 1, 2010, the six original ASEAN members will slash the average tariff on Chinese goods from 12.8 percent to 0.6 percent.

The idea of CAFTA has gone through almost a decade from being proposed in 2000 to being put into place. During the decade, China and ASEAN have been pursuing a common principle - friendship, trust and free trade. The CAFTA will definitely bring the two sides much closer.

The rising bilateral trade volume showed the closer relationship between the China and ASEAN. The trade volume topped more than 231.1 billion U.S. dollars in 2008, a great leap from the merely less than eight billion U.S. dollars in 1991.

The first 11 months of 2009 saw the trade volume at 187.05 billion U.S. dollars, down 13.2 percent year on year because of the shrinking global demand amid the global economic downturn. But the decline rate was smaller than that between China and European Union, United States and Japan.

The financial crisis originated in the United States in September of 2008 not only dragged the world economy into recession, but also undermined market confidence and credit systems. No country was free from fallout of the crisis, but the persistence and resolution from China and ASEAN on cooperation for free trade will ultimately get the two sides out of trouble.

Looking back into history, every time when a global economic crisis stroke, trade protectionism emerged to the surface as nations pinned hope on such measures to protect their own industry and employment.

However, globalization and cooperation is unstoppable. To see others as sole competitor and adopt protectionism measure would do nothing good but extend the fallout of the lingering crisis and stifle the recovery of the world economy.

The same happened during the global economic crisis this time. Some nations in the western world did not seek cooperation as a way to lead them out of the turmoil. Instead, they preferred isolating themselves from other nations and adopted trade protectionist measures.

Such measures never stand alone. One country's protectionist measures would result in chain effect and trigger retaliatory policies, which would create a vicious circle and stifle world trade and jeopardize international relationship.

Global Trade Alert (GTA) launched by the UK' s Centre for Economic Policy Research estimated in its report in September of 2009 that in the first half of 2009 approximately 70 measures likely to harm foreign commercial interests were imposed by governments.

From September to the beginning of December of 2009, 105 additional measures had been identified, which was almost nine times the number of benign or liberalizing measures implemented in the same period, the report said.

China, whose strong growth helped contribute to the recovery of the world economy, fell victim to the increased protectionist measures. China was the most frequent target of protectionism, according to the report.

Data from the country' s Ministry of Commerce showed that from Jan. 1 to Nov.3 of 2009, 19 nations or regions launched 101 trade investigations against Chinese products, with a total trade volume of 11.68 billion U.S. dollars.

However, China and ASEAN still stick firmly to their stance on further opening their market and expanding cooperation to cope with the global economic crisis. They rolled up sleeves and said "No" to the rising protectionism.

The establishment of CAFTA was in line with the development trend of the world economy, and an active instrument to spur economic growth and boost confidence of two sides in combating the crisis together. It would also lift Asian economy by advancing regionalization in Asia and move forward integration of world' s economies.

Some leaders of nations have denounced protectionist measures and vowed to reject protectionism. But to deal with the issue needs more than just words. As Chinese Premier Wen Jiabao said in the interview with Xinhua News Agency," China will join hands with other nations to oppose protectionism and push forward progress in Doha round of talks. The urgent need now is action."