Sunday, February 04, 2007

More on China

Because I’m still thinking about China, here’s another link to a summation that the Nightly Business Report wrote on this formal complaint the U.S. is making to the World Trade Organization. From the USTR release:

“We recognize that China has taken significant steps to open its market and reform its trade practices since becoming a Member of the WTO, and both countries are benefiting from a deeper and stronger trade relationship,” Ambassador Schwab added. “However, where China has failed to meet its commitments, we will use the full array of tools available to secure compliance. Our decision to bring this case to the WTO comes after our efforts at dialogue failed.”

Before I go on, the wording and feel of Schwab’s statement is reminiscent of a collection agency sending a letter requesting for an account to be paid in full. However, while a funny observation, it’s irrelevant, so I’ll move on.

What this press release shows is that China really does have a problem, which is that they use subsidies that effectively lower what the price would otherwise be on the market. Something that I before said was “no-no.”

China’s usage of subsidies is the deal breaker in my opinion, but the problem is that the US also has subsidies of its own that many economists don’t approve of either. And if I were China, I would surely use that excuse when the World Trade Organization comes knocking on my door.
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