As featured on p. 218 of "Bloggers on the Bus," under the name "a MyDD blogger."

Monday, September 14, 2009

China Can Go Ahead And File A Complaint

I mentioned briefly China's counter-charge against the United States in exchange for extending tariffs on tire production. They have decided to probe US chicken and auto parts sales in China, accusing American exporters of "dumping" (selling goods at less than cost). Marcy Wheeler has a look at this:

I assume China is targeting chicken because our Ag is subsidized and the meat industry has a lot of clout in this country.

I'm more fascinated by China's decision to go after auto parts (and note, some of the announcements on this say "automotive products," which might include cars themselves).

In truth, China imposes huge tariffs on cars coming into its country (and ties permission to import cars to sourcing in China--for example, GM might get to import a certain number of Cadillacs in exchange for sourcing another part of its Chinese-production in China). And the import of parts is often limited to more complex parts that are the same in China as they are in the US. There's not much there there.

It looks like China is targeting auto parts because the government is highly involved in GM and Chrysler, and China can using a threatened cut-off of those markets to leverage a scale-back on the tire tariffs. But the problem is that there's a mechanism to settle these disputes called the WTO, and with China as a member this so-called "trade war" will actually be settled by the governing body through a normal resolution process, including whatever retaliation China offers. And on that front, the US action was available under the existing trade agreement, and I can't see how any amount of legal wrangling can deny that fact. In the end, China and the US are symbiotic trading partners, and this tariff raise doesn't have to lead to any escalation at all. We'll see who stands their ground.

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