Yes to discussions, No to bully

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Editor's note: The article is based on an interview with Liu Chunsheng, an associate professor at the Beijing-based Central University of Finance and Economics and deputy dean of Blue Source Capital Research Institute. The article reflects the author's opinions, and not necessarily the views of CGTN.

China filed WTO complaints about US safeguard measures on imported photovoltaic products and subsidies for its domestic renewable energy products on Tuesday, announced the Ministry of Commerce.

How photovoltaic products matter

In January, US President Donald Trump announced to take global safeguard measures on imported washing machines and photovoltaic products. As he claimed, the safeguard measures on photovoltaic products will last three years, and the additional tariffs imposed is up to 30 percent.

The announcement is based on the result of the "201 Investigation", an investigation with a strong character of unilateralism.

According to Securities Daily, under the influence of "201 Investigation, the export from China to the US have declined 97 percent in the first 6 months in 2017. The recession is estimated to last at least four years.

And some experts believed that this investigation somehow reflects Trump's words on developing clean energy back to his presidential campaign. The aim was obvious. Trump attempted to force more manufacturing factories going back to the US.

The US measures severely harmed the benefits of China. As we are living in a highly globalized world where the economies of different countries are highly connected, the actions at the same time severely distorted the international market.

Chinese manufacture of photovoltaic products exported to Europe and the US./ VCG Photo.

The imposed tariffs may hurt the US as well. "If the Chinese exported photovoltaic products are used as the accessories, the production cost of related US enterprises will rise. If they are sold as a complete product, the living cost of consumers will increase.

"If they are purchased as the raw materials, the costs of manufacturing will rise," said Professor Liu Chunsheng, an associate professor at the Beijing-based Central University of Finance and Economics and deputy dean of Blue Source Capital Research Institute.

The legal basis

WTO regulates that the safeguard measures can only be taken when the increase in imports of any products that threaten to cause or already caused a serious injury to its domestic industry.

However, US' measure is suspected of abusing the WTO rules. "This kind of abuse of safeguard measures not only hurts the legitimate rights and interests of China but also affects the seriousness and authority of WTO rules," said the spokesperson of China's Ministry of Commerce on August 14.

According to Liu, this action is a symbol of US' unilateralism and protectionism. China hopes to draw support from the power of the multilateral system to seek a reasonable solution for the dispute.

Providing subsidies on its domestic renewable energy products, however, violates its national treatment obligations. According to the principle of WTO, it is forbidden to discriminate the imported and domestically made products with inner tax or government regulation.

Wang Shouwen, China's vice minister of commerce, poses for a photograph following an interview at the World Trade Organization (WTO) headquarters in Geneva, Switzerland, on Wednesday, July 11, 2018./ VCG Photo.

The US's behavior has put the American manufacturers and foreign manufacturers in an unfair competition and has broken the slogan of "fair trade", which it always claims, said Professor Liu.

Ironically, during the US-triggered trade war, the subsidy towards its own enterprises is an excuse that Trump always uses to criticize China.

The role of WTO is without doubt

Though Trump threatens to withdrawal from WTO and the call for WTO reform comes frequently and repeatedly, as the "only global international organization dealing with the rules of trade between nations", the authority and contributions of WTO to maintain the multilateral trade system is without doubt, said Liu.

The current WTO system does have some problems and a reform is necessary. But the reform should be discussed among member countries, who should sit down to find out a better solution for WTO to accommodate the current international situation. Different voices are welcomed, but bully or unilateral actions should never be tolerated, according to Liu.