US losing cool is no way to solve problems
By Yuan Peng (China Daily)Updated: 2007-04-04 08:56
[The author Yuan Peng is a researcher with the China Institute of Contemporary International Relations]
US Secretary of Commerce Carlos Gutierrez announced last Friday that the United States would slap punitive tariffs on glossy paper imported from China to protect American manufacturers from the impact of China's government-subsidized products.
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The explanation Gutierrez gave for this decision was that today's China is not what it was a few years ago and, as China has developed, the means for the US to ensure fair trade should be expanded as well.
This explanation is far from convincing. Previously the US did not apply the countervailing act on China because its economy was rather weak; whereas today it is necessary to punish China because it is more developed economically.
Does this mean the level of China's economic development will be the main criterion for the US to decide whether to employ punitive measures against China?
Another puzzling fact is that, since the US has never recognized China as a "market economy", why did it abandon the pragmatic approach pursued for more than 20 years on the issue of government subsidies for some Chinese industries?
By breaking with the usual practice, Washington is subjecting China to double injustice as it unfairly treats China as a "non-market economy" with punishment meant for "market economies". With this move the Bush administration has opened the door for other US industries such as steel and furniture to follow suit. This would very likely deal a heavy blow to normal economic and trade relations between the two countries.
What has prompted the US to make a move that defies the hidden rules on bilateral trade? The root cause is domestic politics. Since the beginning of this year, the trade subcommittee of the House of Representatives Ways and Means Committee and Senate Finance Committee have held four hearings on issues including China's currency exchange rate, intellectual property rights, opening of China's financial market and the trade imbalance.
Democratic Senator Charles Schumer and Republican Senator Lindsey Graham are back again with a bill that "the president cannot veto" to force China to relax its control on the RMB exchange rate. Such topics are making the rounds again because the Democrat-controlled Congress wants to show off its influence by increasing pressure on the Bush administration to push China. Senator Schumer and his like-minded colleagues are eager to attract public attention by playing a remix of the RMB exchange rate oldie.
As the US presidential election campaigns heat up, neither the Democratic nor the Republican Party wants to be seen as indifferent to the growing trade deficit with China. They both hope to win over US voters by scoring against China.
Another important reason for the Bush administration to give up the usual practice of resisting Congressional pressure to launch unilateral actions against China is that the US side has failed to achieve any breakthrough in China-US strategic dialogue on economic or other issues. Even Treasury Secretary Henry Paulson, who is relatively soft on China, has become impatient.
The US government decided to use punitive measures against China this time as
a response to domestic political pressure along with the hope of forcing China
into more compromises before the second round of bilateral strategic dialogue on
economy in Washington next month.
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