Let The World Be Flat, Then
Here's something everyone can sink their teeth into - the White House enforcement of trade laws! Actually, it's more serious than it sounds. The Chinese are undercutting American manufacturers on price through actions of questionable legality, and the Obama Administration needs to make a choice on whether or not to enforce that.
By Sept. 17, Obama must decide whether to slap a 55 percent tariff on tires imported from China, as recommended by a federal trade panel, or leave the matter alone, as a phalanx of lobbyists representing manufacturers in China and U.S. companies that import from them are urging.
From 2004 to last year, the number of Chinese tires imported to the United States more than tripled, and their share of the U.S. market rose from 5 percent to 17 percent. Over the same period, the share of the U.S. market served by U.S. factories declined by a similar amount. More than 5,000 U.S. jobs were lost.
Opponents of the tariff say the U.S. industry's shrinkage is unrelated to the surge in Chinese imports. The U.S. manufacturers, they say, have strategically moved into pricier, more profitable tires, shifting production of cheaper tires overseas.
This is a measure designed to save American manufacturing jobs. The "world is flat" crowd tells us that we shouldn't bother so much with that, because globalization has provided cheap crap for us all and the world must freely trade. The answer to that is that all countries restrict their own markets. Toyota wouldn't exist without tariffs. A lot of major industries overseas wouldn't. In particular, Chinese industry receives government subsidies that violate international trade law, and they should face the consequences.
In one of the largest U.S.-China trade cases ever, the U.S. Commerce Department has issued a preliminary finding that Chinese steel pipe producers have received government subsidies in violation of trade law, helping them overrun the competition.
The volume of steel pipes imported from China more than tripled between 2006 and 2008, rising from $632 million to $2.6 billion, according to the Commerce Department.
The subsidies from the Chinese government allowed the firms to overwhelm their U.S. rivals, according to six U.S. companies that filed the complaint along with the United Steelworkers union. The companies alleged that their Chinese rivals received discounts on raw materials and loans from government-owned firms.
To even the playing field, the Commerce Department has ordered that tariffs ranging from an estimated 11 percent to 31 percent be imposed on the steel pipes from China.
The steel pipes at issue in the case are those used primarily by the oil and gas industry. They are known as "oil country tubular goods." By dollar volume of imports in the industry, the case represents the largest U.S.-China trade case ever, attorneys said.
If you want to argue for a level playing field, you have to be willing to call out both sides and seek one that's truly level. Good for the Obama Administration, so far, for making that case.