Bush sparks trade war with China

MKSheppard · Post by **MKSheppard** » 2003-11-19 09:37pm

BEIJING (Reuters) - China denounced a move by the United States to cap selected textile imports on Wednesday and scrapped missions to buy American farm goods, saying the U.S. measure sullied the spirit of free trade.

China postponed indefinitely a plan to send a delegation to buy U.S. cotton and wheat, an industry source in Hong Kong told Reuters, news that followed cancellation of a separate trip to buy soybeans.

The cancellations were blamed on visa and logistical problems but raised fears they were retaliation for the U.S. quotas on imports some Chinese textiles.

The Bush administration said on Tuesday it would slap import quotas on Chinese knit fabrics, bras and robes, signaling a new line of attack against the world's fifth- largest trading nation. Some U.S. officials have blamed job losses on the rapid rise of Chinese textile imports.

"The Chinese government expresses deep regret and firmly opposes this decision," Commerce Ministry spokesman Chong Quan said in a statement.

It "runs against WTO principles on free trade, transparency and non-discrimination," Chong said, adding that China may take the dispute to the World Trade Organization.

The U.S. measure concerns less than five percent of China's textile exports to the United States and won't take effect for three months.

U.S. National Security Council spokesman Sean McCormack told reporters in London the administration was committed to free trade and that the textile move was "consistent with our commitment to ensure that U.S. companies have time to adjust to market disruptions caused by rising imports."

TEMPORARY SPEEDBUMPS

Deputy U.S. Trade Representative Josette Shiner said the safeguards were included as part of China's WTO entry package as a way to temporarily slow the pace of fast-growing imports.

"They were designed as some temporary speedbumps if we saw a surge in certain import areas," she told reporters in Beijing.

Chinese officials had made clear they would have preferred Washington not invoke the safeguards but had not indicated what their response would be, Shiner said.

The quotas would cap the rise in Chinese textile shipments at 7.5 percent above the total for the last year or so, and would be in place for a year.

The move stoked fears Washington may be shifting to more protectionist policies, helping push the dollar to record lows against the euro overnight.

U.S. manufacturers say China has pumped up its trade surplus with the United States by keeping the exchange rate of its yuan currency unfairly low, giving its goods an edge in world markets.

The United States estimates its deficit with China will rise about 20 percent this year to $120 billion, a hot political issue in the run-up to the 2004 presidential elections.

"We expect the Bush administration to take further steps to restrict imports of Chinese textile products, which is likely to lead to flare-ups in trade conflicts between China and the United States," said Guo Changsheng, textile analyst at China Southern Securities.

CHINESE CALL FOR ACTION

China had been scheduled to send several groups to the United States over the next few weeks as part of a multi-billion dollar shopping spree aimed at showing it was serious about narrowing the trade gap.

A Commerce Ministry spokesman said one purchasing delegation had been delayed due to "itinerary problems" but declined to say what the group had intended to buy.

Some Chinese business groups called for retaliation.

"I think we should react somehow and call on the government to do something," said Shi Jianwei, executive vice president of the China Cotton Association and head of the China Cotton and Jute Bureau.

Reached again later, Shi said he had not heard the cotton trip had been canceled, but added he felt the delegation should still go for talks even if they didn't buy any cotton.

China's Chamber of Commerce for Import and Export of Textiles said in a statement the move would "ruin the fundamental interest of Chinese textile exporters" and hurt American consumers.

The chamber also said China's imports of U.S. fabric and raw material had skyrocketed this year, jumping nearly 150 percent year on year to hit nearly $790 million in the first nine months.

The American textile industry, which said it has lost more than 316,000 jobs since the start of 2001, praised the U.S. decision but said it should merely be a first step to putting a lid on virtually all Chinese textile imports.

Joe · Post by **Joe** » 2003-11-19 09:39pm

Fucking textile business. Has been protected for over 200 years now, and it remains our oldest infant industry.

Illuminatus Primus · Post by **Illuminatus Primus** » 2003-11-19 10:41pm

Bush is a moron who never stays to his original claims.

Free trade? What free trade?

MKSheppard · Post by **MKSheppard** » 2003-11-19 10:50pm

Illuminatus Primus wrote:Bush is a moron who never stays to his original claims.

Vote Wilson, he kept us out of war!

Axis Kast · Post by **Axis Kast** » 2003-11-20 02:01am

Free trade is superior to protectionism once a nation has exited its period of early growth and established a functional infrastructure that at least decreases complete reliance on foreign products and provides for a certain minimum of export profit. Any money lost in terms of job depletion and industrial “roll-back” is, after all, saved for (re)investment by those who can purchase cheaper, often better-produced goods made elsewhere. One must also remember that wages are rising in those Third World nations that now produce the majority of our cheaper finished goods (South Korea, for example), which eventually closes the “opportunity/wage gaps” about which so many fret.

As for China however, they engage in consistent protectionism themselves – view the decision to purchase only domestic computers for internal bureaucracy. It’s clear favoritism. One must wonder if we aren’t simply giving them a bit of their own medicine in return for being spurned ourselves. I'd like to see a more thorough fiscal comparison before I declare this particular course of action wise however.

PainRack · Post by **PainRack** » 2003-11-20 05:36am

Axis Kast wrote: As for China however, they engage in consistent protectionism themselves – view the decision to purchase only domestic computers for internal bureaucracy. It’s clear favoritism. One must wonder if we aren’t simply giving them a bit of their own medicine in return for being spurned ourselves. I'd like to see a more thorough fiscal comparison before I declare this particular course of action wise however.

Here's the problem however, its better for the Chinese to purchase their own computers, than to purchase it overseas.

1.They don't need advanced Pentium IVs and Deep Blue.
2.Its cheaper both in terms of production cost, the exclusion of transport costs as well as currency exchange.
3. Their technical support is in that country. There's a reason why Bell computers never took off in East Asia. They either couldn't compete with the chinese interface computers like Acer in Taiwan, or their parts supports needs to be purchased from overseas.

If you ask me, china is only protecting two areas of her economy. Her finance and agriculture. The former exists because the banks can't even surivive in the communist era, much less in the competitive global world, the former due to the drastically high unemployment rate, with unofficial rates as high as 25%.

China is making the transition from a command economy to a capitalist one. In the process, its freeing up lots of formerly unused production potential that was locked up under the communist regime. After all, China herself lost 11 million manufacturing jobs, as her state firms shut down and more modern factories with fever people come on line. It would appear that China is now undergoing the same transition that occured to America in the mid 19th Century. The slow realisation of her economic potential.

BoredShirtless · Post by **BoredShirtless** » 2003-11-20 05:40am

Axis Kast wrote:
As for China however, they engage in consistent protectionism themselves – view the decision to purchase only domestic computers for internal bureaucracy. It’s clear favoritism.

No it isn't. You're looking at the conclusion [they bought local computers] and making up from thin air one of the following:
* They did not shop around to compare foreign computers with local.
* They did shop around and found foreign computers are the better buy, but went with locals anyway.

Axis Kast · Post by **Axis Kast** » 2003-11-20 12:00pm

No it isn't. You're looking at the conclusion [they bought local computers] and making up from thin air one of the following:
* They did not shop around to compare foreign computers with local.
• They did shop around and found foreign computers are the better buy, but went with locals anyway.

They made the decision to buck reliance on foreign products – an argument similar to that made by steel protectionists at home.

http://news.zdnet.co.uk/software/develo ... 759,00.htm

Here's the problem however, its better for the Chinese to purchase their own computers, than to purchase it overseas.

1.They don't need advanced Pentium IVs and Deep Blue.
2.Its cheaper both in terms of production cost, the exclusion of transport costs as well as currency exchange.
3. Their technical support is in that country. There's a reason why Bell computers never took off in East Asia. They either couldn't compete with the chinese interface computers like Acer in Taiwan, or their parts supports needs to be purchased from overseas.

If you ask me, china is only protecting two areas of her economy. Her finance and agriculture. The former exists because the banks can't even surivive in the communist era, much less in the competitive global world, the former due to the drastically high unemployment rate, with unofficial rates as high as 25%.

China is making the transition from a command economy to a capitalist one. In the process, its freeing up lots of formerly unused production potential that was locked up under the communist regime. After all, China herself lost 11 million manufacturing jobs, as her state firms shut down and more modern factories with fever people come on line. It would appear that China is now undergoing the same transition that occured to America in the mid 19th Century. The slow realisation of her economic potential.

This has nothing to do with whether or not it’s unfair play. Justify China’s actions all you like; I could find you equally as heartfelt arguments as to the value of protectionism. That doesn’t mean it’s not clear favoritism.

BoredShirtless · Post by **BoredShirtless** » 2003-11-20 12:12pm

Axis Kast wrote:

No it isn't. You're looking at the conclusion [they bought local computers] and making up from thin air one of the following:
* They did not shop around to compare foreign computers with local.
• They did shop around and found foreign computers are the better buy, but went with locals anyway.
They made the decision to buck reliance on foreign products – an argument similar to that made by steel protectionists at home.

http://news.zdnet.co.uk/software/develo ... 759,00.htm

Quoting article: In addition to commercial reasons for protecting local software, there are security concerns. China is placing official support behind the Red Flag Linux operating system, which they trust because the open-source code allows officials to see that there are no data spyholes installed by foreign powers. In response, Microsoft has been on a charm offensive, including granting the government inspection rights over Windows source code and creating a new chief executive position for Greater China.

Spying is a legitimate concern for the Chinese. Therefore going local isn't favoritism, but a real requirement. Though they are playing favorites too. It's a fuzzy issue.

Axis Kast · Post by **Axis Kast** » 2003-11-20 12:15pm

But, as you've admitted, protectionism remains a key factor.

BoredShirtless · Post by **BoredShirtless** » 2003-11-20 12:17pm

Axis Kast wrote:But, as you've admitted, protectionism remains a key factor.

Right, it's one of several keys.

Durandal · Post by **Durandal** » 2003-11-20 12:20pm

I have to laugh when a communist regime accuses another country of sullying the spirit of free anything.

Axis Kast · Post by **Axis Kast** » 2003-11-20 05:26pm

I have to laugh when a communist regime accuses another country of sullying the spirit of free anything.

Precisely.

PainRack · Post by **PainRack** » 2003-11-21 10:29am

Axis Kast wrote: This has nothing to do with whether or not it’s unfair play. Justify China’s actions all you like; I could find you equally as heartfelt arguments as to the value of protectionism. That doesn’t mean it’s not clear favoritism.

that's the whole argument. Is it protectionism? As I already said, it makes more sense for them to purchase local than to purchase from Mircrosoft.

Axis Kast · Post by **Axis Kast** » 2003-11-21 03:37pm

It's protectionism because other companies are being locked out of the market. It is policy that the Chinese bureaucracy is not to use any other operating system.

You also can't say that Microsoft's proposal is more expensive than that of domestic corporations. The words "aimed at breaking dominance" are rather clear indicators that its favoritism (i.e. protectionism) at work.

MKSheppard · Post by **MKSheppard** » 2003-11-21 07:40pm

OKYO Japan will impose tariffs of about 30 percent on U.S. iron and steel products as early as this year in retaliation for U.S. duties on Japanese steel, Trade Ministry officials said on Friday.

Japan will also raise tariffs on clothing, leather and household goods by about 5 percent, said two officials from the Ministry of Economy, Trade and Industry.

The proposed tariffs will be submitted to the World Trade Organization after they are approved by a customs committee in the Ministry of Finance Wednesday, the officials said.

At the request of the U.S. steel industry, the Bush administration implemented the duties on Japanese steel imports in March 2002. A WTO panel ruled them to be illegal on July 11, and Washington lost an appeal of that decision in a final ruling this month. Japan will be able to impose the tariffs 30 days after reporting the plan to the WTO.

Steel products make up about 40 percent of the ¥10.7 billion, or $98 million, in U.S. imports subject to the extra duties. But only 10,000 tons of the 2.74 million tons of ordinary steel imported in the year ended on March 31 came from the United States, said a spokesman for the Japan Iron and Steel Federation.

European Union policy makers last year drew up a list of U.S. products targeted for retaliatory tariffs, including agricultural goods and products from states considered important to President George W. Bush's re-election campaign. Those tariffs are to take effect next month unless Washington relents.

Bush is on a state visit to Britain, which has also criticized U.S. steel policy. The WTO's director general, Supachai Panitchpakdi, said he supported British efforts to persuade Washington to drop the tariffs.