Trade War

If you don’t think that we now have a trade war between the United States and China, log on to the FT.com Web site to see the record of trade disputes between the two countries.

Since the end of 2001 when China joined the World Trade Organization (“WTO”), there have been 20 formal complaints filed with the body: eight by China against the United States, and 12 by the United States against China. Of these disputes, none were filed in 2003 and 2005, one was filed in each of 2002, 2004, 2006 and 2008, four were filed in 2007, nine were filed in 2009, and three have been filed so far in January. Another way to look at it is that eight trade complaints were filed during the eight years that George W. Bush was in office, while 12 have been filed in the one year that Barack Obama has been President.

And the pace has been accelerating. Of the 12 complaints that have been filed during the Obama Administration, six have been filed since December. In December, China imposed duties on imports of certain specialty steel products from the United States and Russia, while the United States slapped anti-dumping duties on Chinese steel grating imports and imposed duties of from 10 to 16 percent on Chinese steel piping imports.

In January, 2010, the United States put additional duties of from 43 to 289 percent on imports of Chinese made wire-decking, following tariffs ranging from 2 to 438 percent announced in November 2009 on the same products. In February, China announced anti-dumping duties of from 43 to 105 percent on imports of United States chicken products, and then hours after China filed its complaint, the United States put anti-dumping taxes of up to 231 percent on Chinese ribbons used for gift wrapping.

In case you’re scratching your head and wondering, the gift wrapping ribbon industry is not a major one in either China or the United States. According to the report filed by the International Trade Administration of the United Sates Department of Commerce, imports of narrow woven ribbons from China increased by 53 percent during the first quarter of 2009, as compared to the first quarter of 2008. And here’s the clincher, the imports of narrow woven ribbons from China during the first quarter of 2009 totaled all of $2.2 million!

What in the world is going on? How can bureaucrats in Washington justify spending so much time on such tiny issues when the country has such big problems? Isn’t the relationship with China more important to the United States government than a couple million dollars of imports?

Actions like the import tax on ribbons tells me that the relationship between China and the United States is in complete disarray. If you think that a petty action like the imposition of an import duty on an inconsequential product category goes unnoticed in Beijing, think again. If you are an American businessman or businesswoman in China, and your application for approval of some project has slowed, you now know the reason — the action taken by the Department of Commerce to protect the gift wrapping ribbon industry in the United States.

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