US And China To Pursue Trade Policies
By James A. Morrissey, Washington Correspondent
The US/China agreement to conduct a far-reaching Strategic Economic Dialogue is not likely to
result in any changes in trade policies in the near future that would help textiles and other
import-impacted industries. Retailers and other major importers, on the other hand, believe a
diplomatic approach to trade problems makes sense.
Following a round of meetings with high-level Chinese government officials, US Treasury Secretary Henry M. Paulson Jr. said in view of growing economic globalization, a high-level economic dialogue with China will promote economic cooperation and the growth of US/China relations. He added, "It will have a positive impact on world economic development as well as global economic stability and security, and the dialogue will focus on bilateral and global strategic economic issues of common interest and concern."
President George W. Bush welcomed creation of the strategic dialogue, saying: "The economies of the United States and China have been engines of global growth. We must ensure that citizens of both countries benefit equitably from our growing economic relationship, and we work together to address economic challenges and opportunities."
At a news conference following the meetings in Beijing, Paulson emphasized the importance of the process that is underway, and said no one should expect any magic solutions to economic problems that exist with the two countries. He warned, "We are going to need the next two years [of the Bush administration] and many years into the future, and added that there is no way to predict when there will be concrete results."
The US Business and Industry Council (USBIC), which represents some 1,500 small and medium-sized manufacturers, including some textile companies, immediately branded the plan bureaucratic gimmickry. USBIC's research fellow Alan Tonelson said: "Secretary Paulson's announcement of this new institution reveals a determination to substitute bureaucratic gimmickry for meaningful progress in eliminating China's predatory trade practices."
Textile manufacturers and others impacted by Chinese imports had hoped some progress would have been made toward addressing the China currency issue. They contend that China's artificially pegged currency amounts to as much as a 40-percent subsidy for its exports. In view of the lack of progress on that issue, Sens. Charles E. Schumer, D-N.Y., and Lindsey O. Graham, R-S.C., have made a formal request that their bill imposing a 27.5-percent tariff on Chinese imports be taken up by the Senate this week. That bill has the support of textile manufacturers but is opposed by President Bush. The measure is unlikely to be enacted into law, but its supporters believe it is one way to pressure China to act on its currency imbalance.
Members of the Washington-based National Retail Federation (NRF), many of whom are the largest importers of Chinese textiles and apparel, see the dialogue and the currency issue in an entirely different light. Eric Autor, NRF's international trade expert, said at this time the United States has very little leverage with China, and it does not make sense to try to beat her over the head. "China will do what is in China's interest," he said, "and we must work to convince China to move toward policies that are in her best interest as well as ours." He agrees with Paulson that things are not going to move very fast.
September 26, 2006