UPDATED: Tariff War between the US and China
This is big news.
MarketWatch reports on China’s reaction to new US tariffs.
China strongly demands the United States to reconsider this decision and correct it as soon as possible,” China Commerce Ministry spokesman Wang Xinpei said in a statement on a government Web site.
In what’s seen as a big ramp-up in trade pressure on China, U.S. Commerce Secretary Carlos M. Gutierrez on Friday imposed duties of 10.9% and 20.4% respectively on two Chinese manufacturers of glossy paper. See full story.
The move, which marked a reversal in policy for the first time in more than 20 years, was made to counteract alleged Chinese government subsidies to exporters and could set the stage for textile, steel and other U.S. industrial firms to request similar protection.
MarketWatch says coat-free paper imports from China to the US rose 177 percent in 2006 — and were valued at $224 million. The US annual trade deficit with China is $232.6 billion a year.
The NY Times also reports:
The Bush administration, in a major escalation of trade pressure on China, said Friday that it would reverse more than 20 years of American policy and impose potentially steep tariffs on Chinese manufactured goods on the ground that China is illegally subsidizing some of its exports.
The action, announced by Commerce Secretary Carlos M. Gutierrez, signaled a tougher approach to China at a time when the administration’s campaign of quiet diplomacy by Treasury Secretary Henry M. Paulson Jr. has produced few results.
The step also reflected the shift in trade politics since Democrats took control of Congress. The widening American trade deficit with China, which reached a record $232.5 billion last year, or about a third of the entire trade gap, has been seized upon by Democrats as a symbol of past policy failures that have led to the loss of hundreds of thousands of jobs.
Mr. Gutierrez’s announcement has the immediate effect of imposing duties on two Chinese makers of high-gloss paper, one at 10.9 percent and the other 20.4 percent, calculated by adding up the supposedly illegal subsidies.
Xinhua (New China News Agency) has a report. It quotes Chinese Commerce Ministry spokesman Wang Xinpei as saying:
In 1984 the United States set the policy of not applying anti-subsidy law to “non-market economies”. Such a practice had been taken as a judicial precedent and had not been changed, Wang said.
Is China a “non-market economy” in 2007? In some ways yes, in some ways no. It is certainly an evolving economy, and one with leaders trying to stifle the liberalizing political conditions that would help it advance.
Stay tuned.
UPDATE: Welcome visitors from Chinese ISPs. (Since the site experienced four months of relentless DDOS attacks we’re watching traffic a lot more closely…)
