No Chickening Out on Trade Retaliation

With the House of Representatives primed to take up a bill allowing the United States to levy tariffs on Chinese imports to protest China's currency intervention, China announced it was slapping a huge tariff on imports of U.S. poultry, says Fran Smith, an adjunct fellow with the Competitive Enterprise Institute.

This would up the chicken tariff to a minimum of 50.3 per cent and a maximum of 105.4 per cent on chicken products imported from the United States.

This is an escalation from an earlier tariff tacked on by China in retaliation for the United States slapping a higher tariff on Chinese tires last year.

Last Friday, the House Ways and Means Committee approved H.R. 2378, the Currency Reform for Fair Trade Act. Almost immediately on September 26 China's ministry of commerce announced that it had concluded a year-long anti-dumping investigation of U.S. poultry imports and concluded that the chickens were being sold to China at lower than production costs, says Smith.

This was followed quickly by a September 27 announcement by the U.S. Department of Commerce that the People's Republic of China and Mexico were unfairly dumping seamless refined copper pipe and tube, and the United States would be imposing dumping duties on those imports pending a thorough investigation by the International Trade Commission.

It's not likely that these actions and others will advance President Obama's goal of doubling exports in five years as part of an economic recovery plan. Important trade partners such as China that have retaliated against some U.S. protectionist policies may encourage other countries to take action. Tit-for-tat trade remedies won't improve U.S. competitiveness, but can undermine the international trading system, says Smith.

Source: Fran Smith, No Chickening Out on Trade Retaliation, OpenMarket.org, September 28, 2010.

For text: http://www.openmarket.org/2010/09/28/no-chickening-out-on-trade-retaliation/

For more on Trade Issues: http://www.ncpa.org/sub/dpd/index.php?Article_Category=42

First published by the National Center for Policy Analysis, United States

FMF Policy Bulletin/ 12 October 2010