BEIJING - As China and the United States, the world's two largest economies, face more trade disputes, the World Trade Organization (WTO) can provide the best mechanism for handling the disagreements and keeping the bilateral ties intact, said former US trade representative Charlene Barshefsky.

Woven straw baskets made by farmers in Linyi, Shandong province, for export to the United States. The country's trade ties with China have been under a lot of pressure in recent years.[Fang Dehua /for China Daily]

"China has been doing quite well handling the trade dispute cases at the WTO and implementing its decisions," Barshefsky told China Daily at the Washington office of WilmerHale, the law firm where she is now a senior international partner.

As the chief trade negotiator between 1997 and 2001, Barshefsky is best known internationally for her outstanding performance during the historic negotiations with China on the WTO agreement.

Ten years since China became a member of the international trade body, Barshefsky believes the United States and China can take their trade issues through the WTO, which also serves as a platform for bilateral negotiations.

"I think one of the greatest advantages of the WTO is that it provides a very solid mechanism for dispute settlement, and the importance of that is not only that members have confidence in that system but also that trade disputes are channeled into a procedural mechanism that produces results, so the rest of the relationship can simply go on," she said.

"Many years ago, it was quite common that these trade disputes would take over the entire relationship between the countries."

Due to the US trade deficit with China and its sluggish domestic economic recovery, its trade ties with China have come under a lot of pressure in recent years.

In October, the US Senate passed the Currency Exchange Rate Oversight Act, which threatens to punish China for allegedly undervaluing its currency with retaliatory tariffs on imports from China.

But US President Barack Obama has expressed concern over the bill, which might violate WTO rules. Some economists have suggested the US government take a multilateral approach on the currency issue, such as using the WTO mechanism.

As the volume of trade grows rapidly between the two countries, the number of trade disputes filed against each other at the WTO is also increasing, which Barshefsky thinks is "completely normal".

"Now the United States and China both recognize the importance of the WTO and use it as a platform to negotiate their differences even if they never file cases," she said.

"The number of disputes will increase, some of them will be very large, but they will remain manageable."

As China celebrates and reflects on its WTO membership, the US trade expert said China's integration into the global economy has shifted competition around the world.

In economic terms, the emergence and re-emergence of major countries, such as China, create not only benefits to its trading partners, but also some challenges, she said.

"For example, in textile trade, where China is exceptionally competitive, for many small countries it is quite a challenge," she said.

"On the US side, as China moves up the innovation curve, its products will become increasingly competitive with mainstream US products in sophisticated manufacturing, technology and so on."

Barshefsky suggested that in the next 10 years China do two things to balance its trade with other major economies: shift its economy from investment-led growth to domestic consumption-driven growth and become robust in investment overseas.

"I think its going-out strategy is very important for many reasons, including the recycling of dollars abroad," she said. "Investment abroad will help also to create jobs and profits abroad, which is another important aspect of rebalancing the trade."

Having advised dozens of top US multinational corporations on penetrating the Chinese market, the international trade expert is willing to assist Chinese companies' investment in the US as part of her long-term commitment to building a stronger US-China relationship.

"Of course I will be delighted (to help Chinese companies invest in the US)," she said. "I have spent the last 20 plus years helping to build stronger relationships between the US and China, and particularly through the mechanism of economics, economic policies, trade and investment.

"These elements are the foundation of the US-China relationship and helping Chinese companies investing in the US is part of that."