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U.S. files WTO case against China over exports
The Obama administration on Tuesday filed its first unfair trade case against China before the World Trade Organization, accusing the Asian power of restricting exports of key raw materials needed for the production of steel, aluminum and other products.
U.S. Trade Representative Ron Kirk said at a news conference that the U.S. is “deeply troubled at what appears to be a conscious policy to create unfair advantages for Chinese industries.”
The European Union also filed its own case on the matter, setting the stage for what could be a key showdown among the world's major trading countries.
The materials at issue include coke, bauxite, magnesium and silicon metal, the U.S. complaint notes. The U.S. and EU complaints say China's export restrictions give its companies an unfair edge over their foreign rivals by giving them access to cheaper materials, despite WTO rules against export curbs.
“The Chinese restrictions on raw materials distort competition and increase global prices, making things even more difficult for our companies in this economic downturn,” EU Trade Commissioner Catherine Ashton said in a statement.
Both Ms. Ashton and Mr. Kirk expressed hope the issue could be resolved during a 60-day negotiating period. But if that doesn't happen, Mr. Kirk said the U.S. will go forward with a WTO case because of the issue's importance to American companies and workers.
“Dialogue is our preferred course of action, but despite raising this issue with China repeatedly, China has not changed its policies,” Mr. Kirk said. “We are committed to enforcing our rights using all of the resources at our disposal, including the WTO.”
The American Iron and Steel Institute –whose members include Nucor Corp. and United States Steel Corp. – the United Steel Workers and other industry groups released a joint statement praising the administration's decision to pursue a WTO case against China.
“When China joined the WTO in 2001, it committed to removing these restrictions,” the groups said, calling the barriers on the export of raw materials and minerals “just another way in which China favours its domestic manufacturing industries at the expense of the rest of the world.”
The U.S. complaint contends that China maintains a number of measures that restrain the export of raw materials for products for which it is the world's largest producer or near the top, such as coke, a key ingredient in steel production.
A U.S. fact sheet said “a prime example of the highly distortive effects of China's export restraints” was its decision to limit exports of coke from 336 million metric tons in 2008, down to current annual exports of only 12 million metric tons.
Before the export controls were imposed, China accounted for about 60 per cent of global coke production.
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Originally Posted by ASU2003
But we also didn't have massive trade deficits, workers you can't get a raise because there are 5 people willing to do their job for 25% less, massive increases in the amount of pollution because there are no limits on it, and a host of other issues.
If China and India were to buy American products instead of buying the cheaper knock offs, that would be part of it. But when your 'American company' consists on a few upper management in the US, and cheap labor overseas, the executives will make the money for the products they sell, not the workers.
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Are you suggesting throwing good money after bad? If labour markets dry up because of cheaper labour overseas, that's a sign to shift into different markets rather than try to compete directly. You can't compete with Asian labour costs, so compete elsewhere. That's what the U.S. has done with the increases in the service and tech sectors. Pollution is another thing, but it has little to do with Canadian/U.S. trade relations in light of "Buy American," which is the focus I'm concerned with.
Nike and other companies that are more about ownership and marketing than manufacturing aren't the issue here. The issue is American protectionism as some kind of mechanism to make things better in the economy. This is not the way to do it. We don't have the same economy now as we did 70 or 80 years ago. We are globalized and are therefore dependent on world trade to meet our demands and to keep our supply side going. Protectionism is a threat to that. Think of all the Canadian farmers and steel workers who have to hear about this "Buy American" thing, all the while realizing that America is their #1 market. Also think of the people who help import Canadian goods—American workers. Also think of those in the industry who have to deal with increasing prices because of shifting purchasing habits that aren't geared toward the usual supply & demand price effects.
Protectionism does more harm than good, especially the way markets work today. There are already systems of tariffs and quotas in place, which is why we have NAFTA in the first place. An added social pressure to "Buy American" will only cause more instability in an already unstable marketplace.