On March 29, the US International Trade Committee said that China's export of active carbon products had damaged the US industry equivalent.

The US Department of Commerce announced on March 30 a preliminary decision to apply US anti-subsidy law to imports from China. Secretary of Commerce Carlos M. Gutierrez indicated that China was no longer a Soviet-style economy as it was in the 1980s, leading the US to re-evaluate China's subsidy system and apply countervailing duty (CVD) law. The law will be applied to Chinese-made coated free sheet paper. Although the volume of trade is small and the anti-subsidy tax rate is not particularly high, the decision sets a precedent that could have a negative impact in the long-term.

This breakaway decision is the first time that the US has applied its countervailing duty law to a country with a non-market economy. However, according to a Xinhua report, the decision goes against many insiders wishes.

Authorities in both China and the US believe that if the two countries cooperate, Sino-US trade relations will improve. If they fight, both countries stand to lose. The head of the American Soy Association told a Xinhua reporter that his association does not support sanctions on Chinese products as this could aggravate bilateral ties, which is of no benefit to either nation. He said both nations should be open-minded and try to solve the trade problem through negotiation.

Some insiders in the US hold believe that this decision sends out a dangerous signal. The decision is considered to be a meter in Sino-US trade friction. If the US goes ahead and imposes sanctions on China, the worry is that other, less competitive industries might take the opportunity to file suits against Chinese products to protect their own interests. This is trade protectionism disguised by anti-subsidy law, and is against the WTO principal of free trade.

Some senior American officials are also worried about the rise of trade protectionism in the US. President Bush, Federal Reserve Chairman Ben Bernanke and Secretary of the Treasury Henry Paulson have recently spoken out, saying that trade protectionism is not conducive to America's economic development. Paulson pointed out that there are politicians in both the Republican and Democratic parties that are inclined towards protectionism. "This is a worrisome tendency, we must boycott it."

In recent years, China and the US have both made an effort to make progress in trade disputes. Last December, China-US Strategic Economic Dialogue was successfully held in Beijing and both national said they would consider Sino-US relations from a long-term perspective and try to promote bilateral trade cooperation. The second Sino-US Strategic Economic Dialogue will be held in Washington next month. The Chinese Ministry of Commerce hopes the US will reconsider the issue and reverse its decision as soon as possible to promote sustainable and healthy economic and trade development.

By People's Daily Online