11 December 2007

China and U.S. spar over trade, product safety

This article is extracted from Reuters news service on 11 December 2007.

China agreed to stiffer food and drug export controls on Tuesday after a day of trade talks with the United States which were strained by tensions over how to handle consumer alarm about the "made-in-China" tag.

Product safety topped the list of contentious topics at the Joint Commission on Commerce and Trade (JCCT) in which Washington and Beijing try to defuse tensions that have grown along with the yawning U.S. trade gap with China.

Unlike multinationals' complaints about Chinese intellectual property piracy and investment walls that have dominated past JCCT rounds, scares about Chinese-origin toys, foods and additives have galvanized public alarm in the United States.

But they also drew an unusually blunt defense from a senior Chinese official on Tuesday, who was adamant that her country was cleaning up its safety record. The formal talks were delayed for over an hour by what Chinese Vice Premier Wu Yi called a "very heated discussion" between the two sides.

Trade boss Wu said in opening comments that "disharmonious notes" had entered the two nations' dealings, and she argued that U.S. claims about problem products were overdone….

The talks ended on a more conciliatory note, with the two sides unveiling 14 agreements aimed at broadening market access, promoting tourism, encouraging investment and tightening checks on Chinese exports of foods, animal feed and drugs….

PENALTIES

U.S. Secretary of Health and Human Services Mike Leavitt said he hoped that U.S. food inspectors might eventually be posted in China to monitor shipments and help exporters understand American standards….

Despite the flurry of agreements, officials made no secret that big differences remain over the direction of economic ties.

U.S. Secretary of Commerce Carlos Gutierrez said there was debate in the Chinese government about whether to continue opening markets, but he believed it would ultimately do so….

The United States wants to boost its exports to China and is prepared to use "tools" including taking disputes to the World Trade Organisation if necessary, he added.

RECALLS

Tensions have run high in recent months as a spate of recalls has taken Chinese-made toys and other products off U.S. shop shelves. Toy maker Mattel has recalled over 21 million items….

Safety will also take the spotlight when the two countries hold a ministerial-level "strategic economic dialogue" on Wednesday and Thursday to tackle longer-term issues.

With growing U.S. complaints about the country's trade gap with China, Treasury Secretary Henry Paulson will also be looking for signs of exchange rate reforms and other steps that could help even up trade flows.

The U.S. trade deficit with China hit a record $234 billion in 2006 and is on track to surpass that this year.

In an apparent sign that Beijing is not deaf to U.S. lawmakers' complaints that China hands its exporters an unfair edge by holding down the value of its currency, China set the yuan at a new high against the dollar on Tuesday….