U.S. Moves to Put Curbs on China’s Trade : Commerce: If Beijing does not ease limits on imports of American goods in the next year, punitive tariffs may be imposed.
The Bush Administration on Thursday approved the initiation of trade sanctions against China after rejecting the arguments of some State Department officials that such an action could set back efforts to improve U.S. ties with Beijing.
The action means that the United States will investigate formally the extent to which authorities in Beijing limit American exports in the Chinese market. If China does not change its trade practices in the next year, the United States then may retaliate by imposing punitive tariffs that would raise the prices on some of the burgeoning Chinese exports into this country.
Bush Administration officials said that the launching of the trade action should help to counteract public and congressional perceptions that the White House is unwilling to take tough action against China. The action also appears to be aimed at defusing efforts in Congress to impose conditions on the extension of China’s most-favored-nation trade status next year.
“People all think we’re falling all over ourselves to kiss their fannies, and it ain’t true,” asserted one senior Administration official, who spoke on condition that he not be identified.
Some skeptics predicted that the Administration’s action--launched under Section 301 of the 1974 Trade Act--might drag on and result in few or no punitive tariffs against Chinese goods. “This is a one-year delaying tactic by the Administration,” asserted one aide to a senator who opposes the Administration’s policy toward China.
A spokesman for the Chinese Embassy in Washington said that he would have no immediate comment on the Administration trade action.
In 1990, the United States ran a trade deficit with China of $10.4 billion, and Chinese purchases of American exports declined by about $1 billion from the previous year. By most estimates, the U.S. trade deficit with China will be about $12 billion this year, about the same as with Taiwan and higher than for any other nation in the world except Japan.
The official U.S. investigation will focus on a series of Chinese trade practices that affect American exports. These include bans on specific imports, a series of licensing and testing requirements for American products sold in China and the failure to make public the laws and rules for U.S. exports.
For years, China has restricted imports by relying on rules that are termed neibu (internal or classified). Though Chinese officials may cite the rules as justification for trade restrictions, foreigners and their companies are not permitted to see them.
For example, a senior U.S. trade official said Thursday, U.S. telecommunications firms such as American Telephone & Telegraph Co., which were trying unsuccessfully to sell digital switching equipment in China, ran up against a secret “State Council Directive 56.” That directive instructs local governments and enterprises to buy such phone equipment only from one of three companies--Alcatel of France, Siemens of Germany and NEC of Japan.
“There are many other rules like this,” one American trade official said. “This just happens to be one case where we got our hands on the directive.”
When talks between U.S. and Chinese trade officials ended in an impasse last August, the Bush Administration gave China until the end of September to explain what actions it might take to change its curbs on American exports.
On Sept. 30, Chinese officials handed the Administration a formal response suggesting that they might change their policies in some areas, eventually. In a written press release Monday, U.S. Trade Representative Carla Anderson Hills termed the Chinese reply “unsatisfactory.”
But the State Department’s Bureau of East Asian and Pacific Affairs, headed by Assistant Secretary of State Richard H. Solomon, reportedly argued that China’s response justified a postponement in the Administration’s plan to initiate a trade action against Beijing. One State Department official said he fears that such an action would become a “watershed” leading to major changes in U.S. relations with China.
A senior Administration official said the effort to seek a delay in the trade action against China was “the kind of knee-jerk reaction you’d expect. . . . They (State Department officials) are trying to protect a client relationship (with China).”
