This may be old news, in light of the WTO agreement announced, but I think it gives an interesting insight into the issues - free trade vs. protectionism vs. dumping.
>>China's Lucrative Export Business Takes Hit as U.S. Tightens Borders
By PETER WONACOTT
Staff Reporter of THE WALL STREET JOURNAL
BEIJING -- What do garlic and gift boxes, crawfish tails and paintbrushes have
in common? Not much until China began exporting them to the U.S., prompting
allegations that it is dumping these and a long list of other products below
fair-market value.
As the U.S. moves to protect domestic industries, illustrated by steps the Bush
administration took this week to restrict foreign steel imports, exporters around
the world may feel a pinch. But no country has been slapped as China has
recently with U.S. antidumping investigations.
In the past several months, China has been named
in five separate antidumping suits filed by U.S.
manufacturers. U.S. makers of folding chairs, steel
pipe and car windshields, among others, charge
their Chinese competitors with shredding markets
by undercutting prices and poaching distributors.
In response, they've demanded punitive tariffs --
often double what is being asked of other
countries named in the investigations, according to documents filed with the
U.S. International Trade Commission.
Targeting China for cheap imports is nothing new. According to U.S. trade
figures, the U.S. launched 68 antidumping investigations against China between
1980 and 1999, giving China about 7% of the total. In June last year, the U.S.
Department of Commerce established a spot on its Web site for "Monitoring of
Imports from the PRC," the only country to be so singled out. A senior U.S.
trade official notes the number of cases filed this year against China appears
normal so far, and won't necessarily result in punitive trade measures unless
Chinese products are shown to have been dumped at prices below what it
should cost to make them. U.S. companies also need to prove they have been
hurt by such imports before punitive duties are imposed under a 1930 Tariff
Act Law.
The most recent dumping disputes go to the core of U.S.-China trade tensions.
As trade between the two countries grows, U.S. companies have put pressure
on Washington to shield them from China's low-cost exporters. China's export
heft has been magnified lately by a slowing U.S. economy and the global trend
favoring cheap imports over domestically produced goods. As a result, trade
frictions are expected to increase, putting extra pressure on a U.S.-China
relationship burdened by a raft of other problems.
"People always turn to Chinese companies when there's political tension," says
James Zimmerman, a lawyer representing a group of Chinese manufacturers in
the antidumping cases. "There's so much mystery behind their cost structures
that there's going to be suspicion."
It's been Mr. Zimmerman's job to make sure Chinese companies aren't barred
from the U.S. market. In the past few years, Chinese concerns started hiring
U.S. lawyers to shepherd them through dumping investigations, but to little
avail, according to Zhang Yuqing, a U.S. trained-attorney who heads the law
and treaty department of China's foreign trade ministry. "We've spent millions
on U.S. attorneys, but still no single industry or product in China is considered
market-based," he says. "It's unrealistic, unreasonable and unbelievable."
Mr. Zhang says he's pessimistic that China can do much to shrink the number of
U.S. antidumping cases. Although China is engaged in dumping spats with other
countries, Mr. Zhang claims the U.S. has been the least flexible in adjusting how
it determines a nebulous concept: "the nonmarket economy."
Under U.S. evaluation methods, huge swaths of China's economy are still
considered state-run. Complicating the picture is the swelling number of
Chinese closely held companies, as well as farmers who grow their own cash
crops, powering an export boom. In addition, in important industrial sectors
such as steel, Chinese labor is roughly 30 times cheaper than labor in U.S.,
handing China's exports a huge advantage that Beijing believes has spurred the
U.S. and other countries to find ways to close their doors.
Chinese trade officials are especially miffed about garlic. "You can't find one
finger of government control, but our farmers can't export a clove of garlic,"
Mr. Zhang says. Saddled with U.S. tariffs in excess of 300% since 1994,
Chinese garlic effectively has been locked out of a lucrative market.
U.S. officials counter that the Chinese government still fixes most prices for
important raw materials such as energy and transportation. Officials add that
they also factor in capitalist elements of China's economy in the final
determination of production costs. But in the absence of verifiable information,
the U.S. often turns to "surrogate" countries like India and Indonesia to
compare costs, a practice China has criticized for distorting results.
And even if Chinese manufacturers launch a strong defense against dumping
allegations, they have to hope the U.S. government doesn't find financial injury
to its U.S. competitors.
For companies like Meco Corp., a maker of folding metal chairs and tables, the
harm has been obvious, says the president of the Greeneville, Tenn., firm. As its
biggest customers deserted Meco for low-cost Chinese imports, sales and
profits plunged, prompting the first layoffs in more than a decade, according to
Allan J. Reitzer. After it laid off 175 employees in February and March, Meco
filed an antidumping petition against China at the end of April.
"There has been a steady buildup of Chinese exports coming into our market,
followed by a more recent surge," says Mr. Reitzer. "And there appears to be
no signs of its stopping."<<
interactive.wsj.com |
