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INB-300-3980 International Business
In today's shopping experience, it is nearly impossible to find a retailer who does not have a store full of products made in China. Manufactures have taken their manufacturing operation to China, the home of cheap labor, an abundant work force, and a regime that does not mind looking the other way when it comes to human rights and any possible violation of those rights. However, is the reverse true in China? Can a shopper go into a Chinese retailer and find products with the Made in the USA stamped on it. The purpose of this paper is to review a Washington Post article that examines a trade dispute between the U.S. and the Chinese.
Article Review 3:U.S., China locked in trade dispute
One thing is true about free trade it is not always free. Countries bicker and squabble over whether one is acting in a way that might be considered unfair. Countries participate in protectionist measures such as state funds, higher tariffs, immigration restrictions and export subsidies in order to protect their citizens from what they perceive as an unfair trade practice. In September of 2009, the World Trade Organization released a report indicating that many of its members have avoided the protectionist measures that exacerbated previous economic crises. However, the same report indicated that there has been some "slippage" by its members.
I mention these details because they have a direct correlation to a trade dispute that involves the United States and the People's Republic of China. The dispute is over the export of tires, chickens, steel, nylon, autos, paper, and salt. Because of these disputes, an already tense relationship between the two economic powers has become more so. President Obama claims that he is trying to protect his country's rights. However, the Chinese have claimed that the United States started the whole dispute by launching what it calls an unprovoked attack. These tensions ramped up in September 2009 when the U.S. imposed an overwhelming 35% import fee on Chinese tires. While in economic terms this tariff was minor, it infuriated the Chinese. The Chinese felt the tariff was a political concession to U.S. labor unions instead of a legitimate punishment for a possible violation that it might have committed.
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Lu Bo, a researcher with the Chinese Academy of International Trade and Economics, a think tank under the Chinese Ministry of Commerce, said, "China could not sit there and do nothing." Therefore, the Chinese fired back with a full arsenal of its own trade complaints. The September 2009 tire duties imposed by the U.S. struck an emotional nerve throughout the Chinese government. Chinese officials believed that President Obama was pandering to the United Steelworkers who helped in his election for the office of the President of the United States.
Therefore, the Chinese claimed that the president violated his promise to the G-20 leadership, that he would avoid protectionist policies. Anti U.S., sentiment turned ugly and on Internet bulletin boards, there was a widespread call for China to begin dumping her vast holding of U.S. Treasury bonds. The Chinese ambassador to the United States, Zhou Wenzhong, said the tire fee represents "a dangerous precedent." He also pointed out that the tire fee was widely criticized by Western scholars and media outlets.
Two days after the U.S. announced the tire fee; the Chinese accused the U.S. of predatorily "dumping" chicken products and auto parts into the Chinese market and issued a warning of retaliatory tariffs. Therefore, in October 2009, the Chinese responded in kind by issuing a duty of as much as 36% for certain nylon exports. However, this did not deter the United States, and on November 4 and 5, slapped anti-dumping duties on Chinese-made steel pipe. They also launched two more probes into Chinese imports. However, it barely took the Chinese 24 hours later to announce that they had opened an investigation into U.S.-made passenger cars. They made accusations claiming that U.S. automakers where evading vehicle import duties by bringing parts into China that would be used in assembly. The Big Three automakers, Ford, General Motors, and Chrysler might end up losing profits that they had been counting on if the Chinese end up penalizing them. The Chinese were not done yet, and on November 10, 2009 issued a statement indicating that they would impose import tariffs ranging from five to 35 percent on an industrial acid used in the production of nylon and medicine. However, this was not the end of accusations, and on December 10, 2009 the Chinese accused the United States of dumping a type of steel used for power generation and ordered the importers to pay penalty deposits that they would hold pending the final results of their investigation. Therefore, by the end of 2009, the United States had imposed tough new duties on steel pipe exported from China.
Bai Shunqiang, who is a professor at the University of International Business and Economics located in Beijing, insists that all the ongoing investigations conducted by the Chinese are
legitimate. Mr. Shunqiang, who had represent his government at the World Trade Organization said, "Signs of trade protectionism are emerging, but I still think China's stance is still the same – that it opposes trade protectionism and embraces free trade." A spokesperson for the Office of U.S. Trade Representative, Carol Guthrie said the U.S.
trade relationship with China remains strong, buttressed by consistent and frank dialogue, effective institutions, and global trade rules. Trade disputes are a normal part of a health, mature trading relationship. The United States has trade disputes with a number of trading partners – the European Union, for instance – and still has healthy relationships because we have all agreed to work under certain rules. This is the case here, as well.
I regret that I was able to find a follow-up article on the status of these trade disputes. U.S. Treasury Secretary Timothy Geithner along with 200 officials and more than a dozen agency chiefs and cabinet executives, accompanied Secretary of State Hillary Clinton in May 2010 on a trip to China to urge them to create a more open and fair trade policy. However, I could not find any definitive information on the talks that went on during that trip pertaining to these specific trade disputes.
Cha, A. E. (2010, January 4). U.S., China locked in trade disputes. The Washington Post.
Retrieved from http://www.washingtonpost.com/wp-dyn/content/article/2010/01/03/