Trade War Watch 4: China Reports USA to the WTO

Bertel Schmitt
by Bertel Schmitt
trade war watch 4 china reports usa to the wto

The Chinese aren’t messing around with this one. On Friday, Obama slapped a 35 percent punitive tariff on Chinese tires. On Monday, a soon as the WTO was open for business, China filed a formal complaint against the United States of America with the World Trade Association in Geneva, China Daily reports.

Under the WTO’s dispute settlement system, the two countries will have 60 days to try to resolve the dispute peacefully, and to pedal back to where they came from. If peace breaks out, China will export its tires, America will sell its cars and chickens. If consultations fail, China can and will request a WTO panel to investigate and rule on the case. If a ruling is reached, both can appeal. The next ruling is final.

China has experience with the proceedings. The United States, the European Union and Canada had taken China to task over spare parts tariffs. China imposed a 25 percent tariff rate on auto parts in 2005, if they accounted for 60 percent or more of the finished product’s value. Normally, spare parts carry a 10 percent import duty. The WTO ruled against China, China appealed, the WTO rejected the appeal. Two weeks ago, China backed down. It was seen as a peaceful signal. It was misread as weakness.

The Chinese mission to WTO said in a statement that the tire ruling “runs counter to relevant WTO rules, it is a wrong practice abusing trade remedies.”

China hopes that “all sides will understand its determination to firmly fight against trade protectionism so as to commonly safeguard the multilateral trading system by respecting WTO rules.”

They won’t roll over. And it won’t blow over unless Obama and Hu Jintao have a beer in the White House Rose Garden, or smoke the peace pipe in Pittsburgh, or do whatever needs to be done to make this thing go away. If it doesn’t, the whole car subsidy thing will come on the table, something the USA and some European countries will try to avoid. Just like Belgium is dragging Germany in front of the EU in Brussels over Opel, a whole globe would like to see the big guys being barbecued for their big wallet bailouts. In a way, this gives Obama a chance to save face. He can tell his United Steel Worker buddies: “Boys, I’ve tried.” Or not.

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  • Patapon Patapon on Sep 15, 2009

    BDB : September 14th, 2009 at 7:36 pm Whatever they pay their Chinese employees and dump to Chinese street have nothing to do with the US. Bull. Air and water pollution doesn’t care about national borders. When they pay their employees starvation wages, it means fewer jobs at good wages here in the USA. Why would a corporation keep their manufacturing in the first world where they have to abide by strict labor, environmental, and safety standards when they can make their stockholders happy by relocating to authoritarian cesspools that have no standards and starvation wages? ------------------------------------------ To whom does the air and water in China belong to? If the Chinese govt want to pollute their environment, it will harm their own people first. I highly doubt the Chinese govt would want that PR disaster. What you don't seem to understand is that your so-called "cesspools with no standards" and "starvation wages" are all relative. Do you think your average production worker would travel halfway across the country, enduring a 2-3 day trip, to work for wages that are below any other job available to them? The fact of the matter is that your standardless cesspool is a decent, and oftentimes better standard of living than many other rural areas. As for your "starvation wages" argument, it is true that they earn less, but everything there costs less as well. By my estimate, even at $1/hr, 3-hrs worth of work is enough to buy a decent meal for the entire day. Not luxurious by US standards, but by no means a "starvation wage" and better than your typical third-world Asian country. But herein lies the irony: Placing tariffs on Chinese goods will only bring the wages down closer to "starvation" level. TTAC pointed this out before in Trade Watch #1, but if the US puts restrictions on China, factories will only move operations to 3rd world countries with even lower wages. Short of blockading an entire hemisphere, these low-skill jobs are never coming back to the US.

  • Dilbert Dilbert on Sep 15, 2009

    "If they paid employees $1 an hour and/or dumped toxic waste into the streets to get “low prices”, they would be thrown in jail!" And if they paid employees $70 an hour and/or followed US environmental standards, they'd be bankrupt. They choose option A, but you can choose not to buy them.

  • Tassos Before you rush to buy this heap of rusty metal, maybe you should wait a day or two.I hear Tim will have an Model T next time.
  • Redapple2 I d just buy one already sorted. Too many high level skills (wiring, paint, body panel fitment et. al.) that i dont have. And I dont fancy working 100 s of hours for $3 /hour.
  • 28-Cars-Later I'm actually surprised at this and not sure what to make of it. In recent memory Senator Biden has completely ignored an ecological disaster in Ohio, and then ignored a tragic fire in Hawaii until his handlers were goaded in sending him and his visit turned into it's own disaster, but we skipped nap time for this sh!t show? Seriously? We really are through the looking glass now, "votes" no longer matter (Hillary almost won being the worst presidential candidate since 1984 before he claimed the crown) and outside of Corvette nostalgia Joe doesn't care let alone know what day it happens to be. Could they really be afraid of Trump, who AFAIK has planned no appearance or run his mouth on this issue? Just doesn't make sense, granted this is Clown World so maybe its my fault for trying to find sense in a senseless act.
  • Tassos If you only changed your series to the CORRECT "Possibly Collectible, NOT Daily Driver, NOT Used car of the day", it would sound much more accurate AND TRUTHFUL.Now who would collect THIS heap of trash for whatever misguided reason, nostalgia for a much worse automotive era or whatever, is another question.
  • ToolGuy Price dropped $500 overnight. (Wait 10 more days and you might get it for free?)