Washington politicians ignoring extent of trade war fallout: US expert

SAN FRANCISCO - The biggest damage a trade war between the United States and China can cause will spill beyond the economy but Washington D.C. politicians, who overstate trade problems, tend to ignore that, a California-based expert said Monday.

"Trade is important for maintaining peace between countries. When you have less trade, it raises the chances of conflicts," John Graham, professor emeritus of international business at the University of California, Irvine, said.

At the Boao Forum for Asia conference in southern China earlier this month, Chinese President Xi Jinping said prosperity and peace are related.

"Trade brings prosperity and peace. That's a hugely important concept. We know it's true and verified empirically," Graham said.

However, the current leadership in Washington D.C. tends to ignore the relationship between trade and peace. That's a very big mistake and dangerous to the world, he added.

In his keynote speech at Boao on April 10, Xi said China will launch a number of landmark measures this year to significantly broaden its market access. It will also try to achieve faster progress in joining the World Trade Organization (WTO) Agreement on Government Procurement.

"The key to human progress since World War II has been opening up markets all around the world. President Xi talked about supporting the WTO and opening up market, which will be good to everybody on the planet," Graham said.

Though the opening up may mean some US workers will lose jobs, Graham said international trade benefits the average American. The problem most countries have is the income disparity between high-income and low-income workers. Trade has nothing to do with it but domestic policies, he said.

"Domestic policies make that happen in all the countries, particularly here. The tax policy and anti-union policy are helping exacerbate the divide of incomes across Americans," he said.

Graham noted that politicians in Washington D.C. almost always overstate trade problems when they focus on merchandise trade deficit.

The United States continues to sell about $20 billion more in services to Chinese customers than China does to the United States, with tourism and education being prominent examples, he said.

The surplus exports in these categories are burgeoning. However, they are not counted in merchandise trade statistics, he pointed out.