Free Trade Can Counter Protectionism

- Jun 08, 2018-

Liu Xiaoming, China's ambassador to the United Kingdom. [Photo/VCG]

Diplomat: China, UK must join hands to ensure economic prosperity, stability

China and the UK must adhere to free trade in the face of "rampant protectionism" around the world, Liu Xiaoming, China's ambassador to the United Kingdom, said during a speech in London on Tuesday.

Liu said the UK and China are natural partners in development and both nations have the responsibility to ensure "economic prosperity and stability in the world".

He was speaking at an event in the British capital hosted by the China Chamber of Commerce in the UK and The 48 Group Club, a network for UK and Chinese businesses.

"Unilateralism is on the rise, protectionism is rampant, populism is spreading, uncertainties and destabilizing factors are increasing," Liu said. "Trade protectionism is becoming a weapon in the hands of a certain country to provoke trade disputes that put the global economy at risk."

Liu's comments came days after Liam Fox, the UK's international trade minister confirmed that Prime Minister Theresa May would use the upcoming G7 meeting in Canada to urge United States President Donald Trump to reverse tariffs he has introduced on European steel and aluminum. Canada and Mexico were also subjected to the tariffs.

Last Friday May said she was "disappointed" by "the unjustified decision by the US to apply tariffs".

The EU said it will start imposing duties from July on a list of US products in response to the US decision to slap tariffs on steel and aluminum imports from Europe.

Canadian President Justin Trudeau also denounced the move, while Mexico retaliated on Tuesday by placing import tariffs on a number of US goods, including pork and bourbon.

Several other world leaders have voiced concerns, saying the tariffs were the latest salvo in a US-led trade war that escalated in March when Trump announced the US would impose tariffs on billions of dollars of imports from China.

"China and the UK are major countries with international influence," Liu said. "The cooperation between the two countries has a global impact. Both have the duty to adhere to free trade and to push for more vigorous, more inclusive, and more sustainable economic globalization."

Liu said trade protectionism is based on "dangerous logic" in which international relationships enter a "zero-sum game" where one country's gain is another's loss. He said no country should put itself above international trade rules and challenged the UK and China to combat a "Cold War mentality" and an "ideological bigotry" that he said is prevalent in the world today.

The World Bank has warned that rising economic nationalism and the trade tensions between the US and its major trading partners could have "severe consequences" for world trade and economic growth.

The bank estimated that the increase of import tariffs worldwide-to the maximum levels permitted by the World Trade Organization-would trigger a 9 percent decline in global trade.

While there are growing concerns about the viability of the existing international trade order, economists still saw positive factors such as China's Belt and Road Initiative which can help support global trade growth.

"The Belt and Road Initiative is increasing transport connections between Asia and Europe with potential consequences for international trade," said Joanna Konings, senior economist for international trade analysis at ING Group.

"Better connections and the lower trade costs that come with them could have a significant global impact. A halving in trade costs between countries and regions involved in the Belt and Road Initiative could increase world trade by 12 percent," Konings said.

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