Posted on 10/29/2003 11:21:43 AM PST by GrandMoM
High-Level Talks Focus on US-China Trade Dispute By Patrick Goodenough CNSNews.com Pacific Rim Bureau Chief October 28, 2003
Pacific Rim Bureau (CNSNews.com) - U.S. Commerce Secretary Don Evans is holding talks with senior Chinese officials Tuesday on a deepening trade dispute that may lead to punitive steps against Beijing unless it is resolved.
In a statement ahead of his meetings with Chinese premier Wen Jiabao and others in Beijing, Evans said China's trade practices were "creating an unfair advantage that is undercutting American workers."
"China needs to create an economic system that is more transparent and one that allows capital to flow freely in response to market forces," he said. "America and the world have a strong interest in seeing China succeed. China's success begins with fair trade."
U.S. trade officials are unhappy with China on several fronts.
They claim Beijing is keeping its currency, the yuan or renminbi (RMB), low against the U.S. dollar, as a tactic to boost Chinese exports to the U.S., by making Chinese products cheaper on world markets than they realistically should be.
U.S. officials, manufacturers and some members of Congress have blamed China's failure to allow the RMB to float freely for last year's record trade deficit, estimated at $103 billion, and for growing unemployment in the U.S.
They also want China to live up to its World Trade Organization commitments, to loosen controls on some imports and clamp down on rampant violations of intellectual property rights, includining the sale of fake CDs, software, pharmaceuticals and other products.
A telling example of China's failure to protect intellectual property rights, cited recently by Evans, relates to Wrigley's chewing gum, which has a 70 percent share of the Chinese market.
Evans said in a speech in Detroit last month that counterfeiters in Guangzhou had copied Wrigley's products, but didn't stop at selling the pirated gum.
"They copied the Wrigley truck. They drove Wrigley's distribution routes. And when they called on Wrigley's accounts, the pirates paid 'premiums' to the shopowners for accepting the counterfeit gum."
Heritage Foundation research fellow John Tkacik said in a report last week that estimating the value of revenue lost because of piracy was an inexact science.
Even so, he added, "Revenue lost due to piracy in China is in the billions of dollars, even by the most conservative estimates."
The Xinhua news agency last Friday quoted the head of China's intellectual property rights watchdog body, Wang Jingchuan, as saying legal action against pirates had increased by almost 18 percent last year.
"The legal authorities and administrative bodies worked in close cooperation with each other and fought against intellectual property rights infringement, which indicates China's resolve to fulfill its pledges to other WTO members," Wang said.
Lawmakers mull tariffs
Evans' visit follows one by U.S. Trade Representative Robert Zoellick, who warned China last Wednesday that its access to U.S. markets depended on "fair" two-way trade.
President Bush himself raised the currency issue with President Hu Jintao at a meeting on the sidelines of the Asia-Pacific Economic Cooperation (APEC) forum in Bangkok last week.
They agreed to send the issue to a joint panel of experts, although Hu told businessmen separately that keeping the RMB's value stable was the right policy for China.
Chinese central bank governor Zhou Xiaochuan was quoted by the official China Daily Monday as saying China would resist "U.S. pressure for a revaluation."
Treasury Secretary John Snow recently warned that the artificially low exchange rate -- the RMB is pegged at roughly 8.28 to the dollar -- gives China an unfair trade advantage and impacts negatively on the U.S. job market.
Some U.S. lawmakers want to apply tariffs on Chinese imports unless Beijing lets market forces determine the exchange rate and takes other steps to free up trade.
Heritage analyst Tkacik warned, however, that the impact of U.S. tariffs should be carefully considered.
"Across-the-board tariffs on Chinese goods would significantly raise prices for U.S. consumers," he wrote in the report.
A more effective response than applying retaliatory tariffs would be for the government to direct trade representative Zoellick to prepare a formal complaint against China at the WTO, he said.
The Texas-based independent analysts, Stratfor, argued that pressing trade sanctions against China could be risky for the Bush Administration.
"This could lead to a backlash by politically powerful U.S. manufacturers such as General Motors and General Electric, who are anxious to get in on the China boom but could suddenly find themselves locked out if Washington imposes sanctions and China retaliates," it said in a briefing Friday.
"The Bush administration could be forced to either face down Congress and oppose sanctions, or to go along with lawmakers and risk opposition from many of its key corporate political backers."
'Undermining security'
According to the associate director of the Cato Institute's Center for Trade Policy Studies, Daniel Griswold, American families clearly benefit from trade with China.
"The clothing, furniture, toys, and electronics that make up a big chunk of Chinese imports keep prices down in American stores and raise the real wages of American families, especially those with middling or low incomes," he wrote in an article on the Cato website.
Griswold said any attempt to erect barriers to trade with China would damage the U.S. economy, and undermine security too.
He disagreed with those who believe enriching China through trade will threaten U.S. security, arguing that putting the brakes on China's economic growth, would cause hardship for hundreds of millions of Chinese.
"A poor, stagnant, and frustrated China would be more unstable and hostile to American interests than an energetic and prosperous one," he argued.
In an article published in China Daily at the weekend, Yin Yue of the China University of Political Science and Law argued that the dispute was political rather than economic.
Noting that 2004 is an election year, Yin said China has become "the victim of U.S. domestic politics."
'Negotiable'
China specialist Prof. Jian Yang of the University of Auckland agreed Tuesday that many in China saw the dispute in political terms.
"The Chinese believe the U.S. side has exaggerated the impact of Chinese exports on U.S. jobs and the Bush Administration is driven by election politics," he said.
On the other hand, even if Beijing decided it was necessary to revalue the RMB, it would not likely do so in a dramatic fashion, lest it be seen as "too weak."
Yang said some Chinese felt their government was entitled to take little or no action, since China's decision not to revalue its currency during the 1997 Asian financial crisis helped other countries, including the U.S.
Asked to predict an outcome to the row, Yang said he doubted it would be allowed to reach a point where it was allowed seriously to damage bilateral relations.
"After all, this is a negotiable issue although the Chinese say it is a matter of sovereignty," he said.
China would eventually adjust its policy, although changes would likely to "gradual and experimental" in nature.
"The dispute may last a while as the White House wants Beijing to move fast and it is facing pressure from various forces.
"Beijing may move faster under strong pressure. However, the White House should understand how far and how fast China could go," Yang said.
Your attempt to be insulting is more of a reflection on your own dim-wittedness. I suppose you miss the irony in the claim that you feel that you are a "capitalist" for that term was coined by Karl Marx. Also your reference to Orwell is interesting too since he too bought into communism. I am finding it more than coincidence that so much of your thought has origins in communist writings. It is also a common trade practice by Hate America First people like you to project your true love for totalitarianism on to others. In previous posts I have made the connection of your statments and their true consequences - all bent towards totalitarianism.
When you call someone who is a member of the John Birch Society "a totalitarian", we know that you are too stupid and careless to be listened to.
Notice how Free Traitors demand China to raise the value of their currency which raises prices in the US for Chinese made goods. But if you talk about tarriffs placed on those exact same goods, you are screamed and yelled at for "wanting to raise prices". Clearly the Griswolds and other Free Traitors don't give a damn about prices of the goods, they just want to hurt Americans and help the communists.
I laughed when I saw Grisworld's shock and dismay when he recognized that Communists don't respect private property rights.. Apparently this is a problem with Free Traitors, they sell their soul to communists and tyrants then wonder why they aren't free.
Your reply is utterly delusional, and typical of the "no one is as conservative as I" mind-set.
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