Reuters
Friday, December 8, 2006
The United States sees potentially escalating trade friction
with China next year as Beijing is stepping up restrictions on
foreign investment and recent U.S. Congressional elections create
uncertainty, a U.S. trade official said on Friday.
"There's potential next year for greater friction in the
trade relationship," Franklin Lavin, U.S. Under Secretary
of Commerce for International Trade, told a business lunch during
a visit to Hong Kong.
Lavin said the United States' record trade deficit with China
was not in itself a problem but barriers to market access for
U.S. companies in China were.
"From the Department of Commerce's point of view a pure
bilateral trade deficit is not intrinsically a sign of a problem,"
he said. "We look at market access: can U.S. businesses fairly
compete?"
It was uncertain how U.S.-Sino relations would be affected by
Congressional elections in the United States last month, which
gave the Democrats control of both the U.S. House of Representatives
and the Senate, he said.
China in the past two years had become much more ambivalent about
the role of foreign direct investment in its economy and was becoming
more selective and not always willing to let market forces work,
Lavin said.
Meanwhile piracy remained widespread in China and a number of
items were still subject to high tariffs.
Lavin hoped the two sides could resolve these issues without
the U.S. having to resort to formal trade action but said China
needed to show flexibility.
Meetings in Beijing next week between Chinese officials and a
top-level U.S. delegation led by Treasury Secretary Henry Paulson,
and including U.S. Trade Representative Susan Schwab, would help,
he said.
"The most effective way to resolve trade issues is through
talking," he said. "The least effective way is formal
trade action."
Massive increases in steel production capacity in China would
lead to global oversupply in a few years if it continues at the
current pace, resulting in dumping or subsidized trade, Lavin
said.
However, he gave China generally high marks for completing its
obligations in the first five years of its admission to the World
Trade Organization.
He also said there was a window of opportunity in the next few
months for the WTO to salvage the Doha Round of trade talks.
"The U.S. needs to move," he said. "We are prepared
to move but we're not going it alone."
Washington was looking primarily at Brussels to make a move as
well.
"We know, as does Brussels, that we've got distortions in
our markets, principally agriculture," he said.
Email
