Posted by: mulrickillion | March 9, 2012

Protectionism does not pay

Opinion – China Daily, March 8, 2012 —

The passage of a new protectionist bill by the US Senate and the House of Representatives to allow anti-subsidy duties on Chinese imports will strain trade ties between Beijing and Washington and make the prospects for a global recovery even more uncertain.

The shock felt by China is understandable, as to balance global trade, it had already cut its trade surplus to 2.1 percent of economic output in 2011 from a high of 7.5 percent in 2007. Meanwhile, the US trade deficit remains as high as 4.8 percent of its GDP in spite of its rising protectionism.

While the United States, which proclaims itself the champion of free trade and globalization, is accusing other trade partners, China in particular, of "not playing by the rules", its lawmakers are now blatantly abusing their power to massage its domestic trade rule.

Such outright hypocrisy among US politicians bodes ill in an era when lack of political will has already prevented most debt-laden Western countries from timely introducing painful but necessary reforms to address their economic woes.

Worse, the myopic bipartisan support for the bill lays bare the fact that more US politicians are eager to cater to and stoke rising protectionism, in disregard of the free-trade spirit they have promoted and a clear threat to steady growth the world wants.

The difficulties that the US needs to surmount are huge given their country’s sluggish economic growth and high unemployment, and it is reasonable to expect US policymakers to try and rebuild US competitiveness in the aftermath of the 2008 financial crisis.

But the solution is definitely not protectionism, which will only dig a deeper hole for the US economy.

By breaking away from its decades-old practice of not legally authorizing the US Department of Commerce to impose countervailing duties on goods from non-market economy countries, US lawmakers are now trying to take the easy way out.

They are trying to protect uncompetitive US industries, at the cost of all the country’s consumers and crucial trade relations, when they should be seeking ways to promote the US’ indisputable advantages in innovation and adaptation.

It does not take a trade expert to expose the fallacy of selling protectionism as a real long-term solution to the structural problems of the world’s largest economy.

Before signing the bill into law, US President Barack Obama should ask himself – will protectionism really save American jobs and help it escape the quagmire it has got itself into?

Protectionism does not pay|Opinion|


See also ‘US trade bill breaks WTO rules’, China Daily, March 8; 2012:


Chinese Commerce Minister Chen Deming says at a press briefing during the National People’s Congress on Wednesday that trade measures passed by the United States Congress violated both US laws and World Trade Organization rules. Wang peng / Xinhua.

Commerce minister says latest vote is Washington attempt at ‘pointing fingers’

Trade measures passed by the US Congress violated both US laws and World Trade Organization rules, Chen Deming, minister of commerce, said Wednesday. . . .

The bill was in response to a ruling by the US Court of Appeals for the Federal Circuit last December that stated that US countervailing duty law, (imposing trade penalties) cannot be applied to what it described as "non-market economies". . . .

See also House Approves Bill That Would Impose Duties on Imported Goods:

WASHINGTON (Reuters) — The House voted on Tuesday to ensure that the United States could impose duties on subsidized goods from China and Vietnam, overwhelmingly rejecting a conservative group’s attempt to portray it as a tax increase. . . .

“China distorts the free market by giving enormous subsidies to its producers and exporters, and our companies and workers should not be expected to compete against the deep pockets of the Chinese government,” Dave Camp, a Michigan Republican who is chairman of the House Ways and Means Committee, said during debate. . . .



  1. Our geniuses in Washington should have learned a lesson from the passage of the Smoot-Hawley Tariff Act passed in 1930. It did it’s finest work making sure that the Great Depression lasted longer than it would have otherwise. I wonder if anyone in Congress has ever heard the term, “Austrian economics”.

    • Yes, I understand your point from a reference to Austrian economics. However, this is an election year and, as seemingly usual, China “bashing” seems especially fashionable and in season right now. Moreover, since the war hawks might not get their new war this season (i.e., an Iran invasion), then maybe they will get a trade “war.” The only solace in a trade war is that causalities might stem from economic fallout, rather than the typical human causalities of war or loss of lives. In the end, practically speaking, because of the WTO rules, the new law, just like the laws charging the US Treasury to investigate China trade, including the “China manipulation currency issue”, actually lacks teeth; all bark, no bite. Otherwise, thank you for your comment.

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