WTO Chief Sees U.S.-China Trade Friction Rising, but Says Trade War Won’t Happen

(The Canadian Press – Bradley S. Klapper)

Trade friction between the United States and China over everything from cars to chemicals will increase in the coming years as the world's biggest importer and exporter buy and sell more of each other's goods, the World Trade Organization's director general said.

Pascal Lamy said his institution was up to the task of ensuring that Washington and Beijing never get into an all-out trade war that could have devastating consequences for the global economy. The WTO will be challenged over the next two years as unemployment figures remain high and test the free trade credentials of world leaders, he predicted. "There is no risk of slipping into a trade war," Lamy said in an interview with The Associated Press on Thursday.Placing the U.S.-China relationship in a historical context, Lamy compared it with the tensions that existed between Washington and Tokyo in the 1980s and between the U.S. and Europe over different periods in recent decades.

In these cases, disagreements increased as the value of their trade expanded, he said. But the international trade body with its negotiations and rules for settling legal disputes defused the tensions. Read more here.