Brendon Clair
Dr. Ruben Berrios
Econ 355, International Trade and Finance
April 30, 2015
Impact of China’s Unfair Trade Practices on the US economy
Investopedia defines unfair trade practices as “Using various deceptive, fraudulent or unethical methods to obtain business” (Investopedia). These methods include false advertising, tied selling and misrepresentation as well as other unlawful acts declared by statute. Over the past decade, the American economy has experience troubles. One of the main problems tying to the troubles over the past decade have been persistent trade deficits, most of them being with China. This trade deficit causes higher unemployment then desired by the American population. Net exports exemplify the difference between
China has very low labor costs when compared to the US, but this is not the only or arguably main factor. “There is a complex array of unfair trade practices, all of which are illegal under free-trade rules” (Navarro, Peter). The most noticeable of China’s array of unfair trade practices, are an abundance of export subsidies. The piracy of American technologies; the counterfeiting of brand names such as Chevy or Nike; a cunningly manipulated and wholly undervalued currency; and obligatory handover of any technology which an American company wishes to sell in the Chinese markets. The Worth Trade Organization and the US government prohibit each of these trade practices. An example being the treasury departments sanctions against manipulation of currency. In 2015, the iacc estimates the total value of global counterfeit goods to be $1.77 trillion (Counterfeiting Statistics). This is majorly detrimental to US manufacturers and causes US exports of these goods to majorly decline. China is not the only culprit, but China is rightfully known to be a major player in the counterfeit
In this example, we looked into how unfair trade practices used by the Chinese are affecting the US trade deficit, which lowers GDP growth rates and causes the American people to lose millions of jobs every year. These unfair trade practices include; counterfeit goods being produced in China devaluing US merchandise, the manipulation of the Yuan and US dollar by the Chinese government, and the Chinese require US technologies to be submitted before being able to be sold in Chinese markets. The product of all of these unfair trade practices is the increase of exports from China into US markets, and the decrease of US exports to
When people in America see foreign goods for outrageous prices and then they see American goods for normal prices, they are going to buy American products. Unfortunately, this is not the only effect of a protectionist policy. Foreign nations often get upset at the increase in American tariffs and respond by increasing their own tariffs on American goods. This weakens the sales of American goods to foreign nations. In order for the United States to have a favorable balance of trade, then they must have strong exports.
When we look at just a few of the specifics of our trade with the U.S., we find that:
In 2001 China entered the WTO it has made major stride in the world economy especially with trade agreements with the biggest capitalist economy and the biggest GDP and most developed country in the world the United States of America which has nearly 2.3 trillion of exported goods and service in 2013 (President, n.d.) When China entered in the WTO it had become the sixth largest economy and the largest market trade and was slightly ahead of Italy and just behind France. “China is third largest trading partner with the U.S and its trade surplus with the U.S. has increased to $201 billion around 2005 and by 2014 the total China-U.S. trade deals was 591 billion”. (Morrison, 2015) It had a global current account of $160 billion around 2005 (Hufbauer, Wong, & Sheth, 2006). As of 2015 “China is the U. S’s second largest trading company and the third largest export company and its biggest source of import”. (Morrison, 2015) Sales from a foreign affiliated U.S. firms in China totaled at 364 billion by 2013. (Morrison, 2015). What is also amazing is that China has the biggest U.S. treasury bonds and that keeps U.S interest rate low. Between 2010 to 2014 General Motor sold more cars in the Chine’s market than in the U.S. market and many U.S. firms participate in Chinese market to stay globally competitive. (Morrison, 2015). This kind of
The United States has for over two centuries been involved in the growing world economy. While the U.S. post revolutionary war sought to protect itself from outside influences has since the great depression and world war two looked to break trade restrictions. The United States role in the global economy has grown throughout the 20th century and as a result of several historical events has adopted positions of both benefactor and dependent. The United States trade policy has over time shifted from isolationist protectionism to a commitment to establishing world-wide free trade. Free trade enterprise has developed and grown through organizations such as the WTO and NAFTA. The U.S. in order to obtain its free trade desires has implemented a number of policies that can be examined for both their benefits and flaws. Several trade policies exist as options to the United States, among these fair trade and free trade policies dominate the world economic market. In order to achieve economic growth the United States has a duty to maintain a global trade policy that benefits both domestic workers and industry. While free trade gives opportunities to large industries and wealthy corporate investors the American worker suffers job instability and lower wages. However fair trade policies that protect America’s workers do not help foster wide economic growth. The United States must then engage in economic trade policies that both protect the United States founding principles and secure for tomorrow greater economic stability.
In 1978, China was positioned 32nd on the planet in export volume, yet it had multiplied its reality exchange and got thirteenth biggest exporter in 1989. Between 1978 and 1990, the normal yearly rate of exchange extension was over 15 percent,[11] and a high rate of development proceeded for the one decade from now. In 1978 its exported on the in the world of the overall industry was insignificant, in 1998 regardless it had short of what 2%, however by 2010, it had a world piece of the overall industry of 10.4% as stated by the World Trade Organization (WTO), with stock fare offers of more than $1.5 trillion, the most astounding in the world.
When America's cotton is sent to China, it is made into T-shirts in the sweatshops of China by laborers working 12-hour days and being paid subsistence wages. When the finished T-shirts re-enter the U.S., they are protected by the government through subsidies, tariffs, taxes, and protectionist policies that ensure that these foreign products will not provide too much competition to American-made shirts. Government regulations control how many T-shirt can be imported from various countrie...
In china, for example, Wal-Mart’s importing operations have significantly affected the manufacturing sector in a manner that gradually unemployment has been stimulated (Holmes 1). The trade deficit between Wal-Mart and China have led to a loss of almost one hundred and thirty- three employment opportunities, especially with Wal-Mart importations. Despite China’s efforts of trying to purchase United States’ treasury bills along with federal securities in an effort to reduce the exportation costs to America, Wal-Mart’s entry into the Chinese market has propelled china’s labor abuse along with internal violations of recognized trade norms (Fishman 1). This is caused by the retail’s growing and vast conduit that allows the distribution of subsidized and cheap Chinese exports to the doorsteps of United States’ market (Neumark, Junfu, and Stephen
The massive increase in the Chinese trading relations was fueled by the United States in the year 1979 through the normal trade relations between the two countries. In addition, the Chinese non-concession to the World Trade Organization (WTO) in the year 2001 also facilitated its trading activities with different countries including the United States (Kaplan, 57). However, trading relations with the Chinese have been uneasy resulting from the massive trade imbalances in the recent past, which grows exponentially. The protectionist policies of the United States especially in Washington and Beijing have been putting pressure on the Chinese to revalue their currency as well as protecting it from counterfeits, which may be of adverse effects to the trading relations. This paper gives a comprehensive discussion on the foreign trade relations with china. It further gives an elaborate discussion on the impacts of foreign tr...
The current trade imbalance is caused in large part by intrinsic features of China's labor market and consumer base. The vast majority of China's 1.3 billion people still live in rural areas. China has, by some estimates, a surplus rural labor force of 120 million people, many of whom migrate to industrial centers to look for factory work, and drive down wages. As long as wages are low, the United States will continue to gobble up products made in China, while Chinese consumers will prefer to buy cheaper, homespun alternatives to American products. The rise in trade deficit with China has come at a cost to jobs in the United States, accordin...
International Trade Law Case Study Introduction International trade transaction is essential for the sale of goods with the addition of an international element. In practice, the seller and buyer are in different countries where the goods must travel from the seller’s country to the buyer’s country by various means of transports. In international sale of goods, they usually transit the goods by sea because of the international transactions. Therefore, contracts for the carriage of those goods must be procured between the seller or buyer and common carrier depending on different types of sale of contracts. Moreover, in most of incidences, the agreed goods are usually insured at a reasonable amount in case of being loss or damaged during the transit.
In November of 2004, the United States ran a fifty-four billion dollar trade deficit, translating to over 600 billion for the entire year. This deficit is a result of the disparity between the amount of goods that the US imports and the amount it exports. To equalize this deficit in its current account, the American government sells assets from its capital account, often to foreign investors. This phenomenon is seen as a serious threat to the success and continued growth of the nation’s economy, tied in with popular concerns that the United States is losing its competitive and dominant edge in global economics. The traditional economic theory employed to solve this problem calls for a return to mercantile protectionism, through use of tariffs and subsidies to drive up the price of imports and lower the price of exports. Running contrary to this is a second option: increasing domestic savings and lowering government spending. These theories both aim to decrease American dependence upon foreign imports and investment, and ultimately equalize the enormous trade deficit that currently exists.
[03 April 2014] 38. Zhu, Y., Warner, M., & Feng, T. (2011). “Employment relations “with Chinese characteristics”: The role of trade unions in China.” International Labour Review, vol. 150, no. 1-2, pp.
Staake, T., Thiesse, F. and Fleisch, E. (2009), ‘The Emergence Of Counterfeit Trade: a Literature Review’, European Journal of Marketing, 43(3/4): pp. 320-349.
...y supply and this causes the collapse in the U.S. and elsewhere (Pinnell, Lecture notes, 3/23). Consequently, countries become very protectionist to protect firms at home and international trade collapses (Pinnell, Lecture notes, 3/23). Therefore, states must make decisions with reciprocity and consequences in mind (Pinnell, Lecture notes, 3/23).
China has also expanded their trading industries with countries such as South Korea, Japan, Taiwan, ASEAN, India, Russia and Hong Kong. This has not satisfied the Chinese greed for income as they also export and import goods to American countries, name...