- The Washington Times - Thursday, December 22, 2011

ANALYSIS/OPINION:

China slapped tariffs on American cars last week. This attack, affecting $3.5 billion to $4.5 billion in sales, is the latest shot in a low-level trade war that’s been waged since President Obama put duties on Chinese tires in 2009. China breaks just about every rule in the book, but retaliatory trade wars ultimately are damaging to everyone.

The 2009 action was imposed as a “safeguard” under the argument our domestic industry was being hurt by imports. The initial tariff level of 35 percent was to stay in place for a year, falling to 25 percent in two years. The problem is temporary tariff protection does little to protect an industry when a country has already lost its competitive edge in a specific sector; all it does is make that product more expensive for the duration of the tariff.

The Obama administration also imposed countervailing duties and anti-dumping duties ranging from 13 to 98 percent on seamless stainless pipes from China in November 2009. China imposed duties in excess of 100 percent on flat-rolled electrical steel. Washington says this was done without adequate proof of government subsidies or unfair pricing practices in a dispute it brought before the World Trade Organization. The United States has asked the WTO to look into China’s restrictions on imports of American broiler chickens and is examining charges of dumping of solar panels.

Then there is the long-standing grievance about China’s alleged currency manipulation and undervaluation of the yuan. The Senate passed a bill which would have allowed companies to seek countervailing duties against countries with undervalued currencies - namely, China. The world, including the Middle Kingdom, would be better off with a market-determined value of the yuan but belligerence won’t achieve that goal.

In the gloomy economy, U.S. exports have grown at 6.7 percent this year and provided one of the few pieces of good news. The last thing we need is an escalation of a trade war to set back our exporting advances. The Court of Appeals of the Federal Circuit upheld the Court of International Trade’s decision that the Commerce Department couldn’t use the law on countervailing duties against nonmarket economies, and the duties imposed on Chinese tires were illegal.

China needs to start playing by the same rules as everyone else. Beijing’s corner-cutting instigates trouble that can only further undermine the struggling global economy.

Nita Ghei is a contributing Opinion writer for The Washington Times.

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