USTR - No Mention of China's Currency Manipulation in Report

The Office of the United States Trade Representative has issued a report on foreign trade barriers. Contained within is no mention whatsoever of Chinese currency manipulation. There is mention of VAT manipulation, tariff-rate quotas and even a 35% tariff on raisins. (who knew?)

While the press is calling this report hard line, I find it kind of wimpy and even question some of the trade figures quoted.

China Exports increase 17.7% in December 2009

The headlines are all on fire with China exports increase 17.7% in a year.

China’s exports surged in December and imports rose to a record in a stronger-than-forecast trade rebound that may lessen the case for governments to sustain stimulus programs this year.

Exports climbed 17.7 percent from a year earlier, the first increase in 14 months, and imports jumped 55.9 percent, the customs bureau said on its Web site yesterday. Year-on-year comparisons are affected by declines from late 2008 as the global credit crisis deepened.

But what is hilarious is the assumption China would somehow re-evaluate their currency due to these figures.

Digging deeper, we see that China has increased imports 55.9%. Raw commodities are the thing that stands out on imports:

Krugman's Back of the Napkin - 1.4 million U.S. jobs lost due to Chinese Mercantilism

Paul Krugman has done a rough, on the back of a napkin calculation on the cost of jobs due to Chinese Mercantilism alone.

if we think of the United States as bearing a proportionate share, and also use the rule of thumb that one point of GDP = 1 million jobs, we’re looking at 1.4 million U.S. jobs lost due to Chinese mercantilism.

Bear in mind this is not a formal result, simply a very rough estimate put forth on his blog for discussion, not a formal research paper.

A couple of IMF researchers estimated China accounts for 0.9% of GWP (gross world product).

Since China's GDP is heavily export driven, Krugman asserts one can look at this as a negative impact on world exports., which in turn, negatively impacts purchases of goods and services from U.S. providers and this is a multiplier effect.

U.S. puts 148% anti-dumping duty on Chinese Steel Grating

A little good news. The United States put a reliminary anti-dumping duties of up to 145.18% on steel grating and also put a 10-16% anti-dumping duty on Chinese steel pipe.

Recall the Bush administration didn't lift a damn finger on China's dumping practices.

The United States imported about $91 million worth of the product from China in 2008. Steel grating is used in industrial floors, docks, ramps, drainage covers, staircases and other applications.

The trade case is one of about a dozen brought by U.S. companies in 2009 against Chinese-made goods that they said have benefited from government subsidies or are being sold in the United States at less than fair value.

The Commerce Department said it set a preliminary anti-dumping duty of 14.36 percent on four Chinese producers or exporters in the steel grating investigations.

U.S. policy for the last 50 years is to get rid of jobs

Few people realize that for the past fifty years the policy of the United States government has been to get rid of jobs.

So says former Senator Fritz Hollings in SOBER UP, a piece calling for an end of the inane rhetoric and a start to seriously formulate trade, labor policy that is in the national economic interest.

Hollings notes on the Stimulus:

With stimulus, we bail as fast as we can to stop the leaks, but do nothing to plug the hole in the hull ripped by offshoring. Stimulation can be a total success and we’ll still loss more jobs than are created.

Hollings calls cash on what globalization is really all about:

Globalization is nothing more than a trade war with production looking for a country cheaper to produce. What we have now is a trade war, without guns.

Obama to Push for "Free Trade" Agreement with Asia

Just when you think it can't get any more obvious, we get this:

President Barack Obama raised hopes for creating an Asia-Pacific free-trade region by announcing Saturday that the U.S. would seek to join a smaller group seen as a precursor to a broader Pacific Rim agreement.

News that the U.S. would participate in the Trans-Pacific Partnership, joining Chile, New Zealand, Singapore and Brunei, was announced in Tokyo and Singapore, drawing applause at the annual Asia-Pacific Economic Cooperation forum.

"Significant steps like the TPP are important to help keep up the momentum in our efforts to realize the ... vision" to create a region-wide free trade area, Singapore Prime Minister Lee Hsien Loong told other leaders at their weekend summit here.

The Headlines on Trade with China are Ridiculous

Because the United States showed just a little sign of life and challenged China's dumping of tires in yet another unfair trade practice, the main stream media screams absurdities.

Take this headline Treasuries Gain as U.S.-China Trade Tensions Threaten Recovery and this one Yen Rises Versus Euro on Signs Trade Protectionism Increasing .

What really happened? China was dumping tires to U.S. markets in order to destroy and capture yet another good by producing under cost, flooding the market to drive down prices temporarily and plain put U.S. tire makers out of business.

A Free Trade Test for the Obama Administration

On September 17, President Obama will have to decide whether to accept the U.S. International Trade Commission's recommendation to impose tariffs on imports of Chinese tires. Here are the findings of the USITC. And here is their final determination:

On the basis of information developed in the subject investigation, the United States International Trade Commission (Commission) determines, pursuant to section 421(b)(1) of the Trade Act of 1974,1 that certain passenger vehicle and light truck tires from the People’s Republic of China are being imported into the United States in such increased quantities or under such conditions as to cause or threaten to cause market disruption to the domestic producers of like or directly competitive products.

Pleading with Obama for a Manufacturing and Industrial Incentive Policy

Leo Hindery, Jr., Leo W. Gerard and Sen. Don Riegle exclaim, It's all about the Jobs!

Our national goals, in the medium term, must be to near fully employ those 30 million currently unemployed American workers, and in the process to more than double the number of Americans working in manufacturing, which is the least amount needed to get our economy back on track sustainably.

It's all about jobs -- whatever it takes!

I will reprint their main policy recommendations, all topics we've covered here.

  • Fund a 10-year (not the current two-year) program of significant public investment to upgrade and rebuild our nation's infrastructure, which will provide the much-needed foundation for higher-value added production and advanced business services.