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Blocking tires, Obama sets bad precedent
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16:38, September 15, 2009

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 Experts say tire tariffs could worsen U.S.-China trade relations
 Experts say tire tariffs could worsen U.S.-China trade relations
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By Li Hong, People's Daily online

All the cool heads in the world hope that the trade spat triggered by U.S. President Barrack Obama's decision to heavily tax imports of Chinese-made passenger-car tires, will not escalate, for a full-blown trade war between the world's two most important economies is likely to derail a global economic rebound.

Obama's approval to blocking tire imports was the first time the United States has used a special import safeguard provision against China. Once the dangerous precedent is made, it will inevitably lure other industries to seek federal protection.

The irritant sent to China by Obama is hard for the public to consume, as a rising number of Chinese bloggers have written in the cyberspace probing true intentions of the American protectionist move.

While it will obstruct Chinese tire imports, the move will hardly land any jobs back to American hands, because American consumers will look to other tire manufacturers such as in India and Brazil for inexpensive substitutes.

Chinese public's anger was even more fuelled by the fact that the country is substantively supporting a problematic U.S. economy, by purchasing nearly US$800 billion American Treasury bonds. There are some analysts here claiming that the country should deserve better treatment, while not a stab in the back, by Uncle Sam. No wonder many are yelling at the authorities in Beijing, demanding it retaliate.

True, the Chinese government is sensitive to public sentiments that the rapidly rising state is being treated unfairly abroad, just as Obama administration is sensitive to petitions of powerful political groups, such as the American Steelworkers Union and other unions which Obama counts on to implement his crucial domestic agendas, including the health care overhaul plan.

However, sacrificing the interests of China tire makers and its own tire consumers, while not giving a plausible relief to American tire manufacturers, is something bordering ridicule.

China's response is quick but restrained. The Ministry of Commerce said it would investigate allegations that American chicken meat and auto parts are shipped to China at lower prices which might involve dumping or illicit government subsidy. It also decided to file a formal complaint to the World Trade Organization hoping to resolve the bickering through negotiations at the world trade body.

The country's averting immediate tit-for-tat, such as imposing punitive tariffs on selected American imports, is considerate and far-sighted. The leadership does not want to undermine the overall trade relationship with the United States, which benefits both peoples. Also, any move of quick retaliation might intensify the trade skirmish and easily spiral out of control. After all, a trade war across the Pacific is the least the two countries and the world want, against a backdrop of global economic fragility.

However, China is looking closely at its evolvement and settlement. If other American manufacturers unions are inspired by the tire case, and also petition Obama administration for protection and relief, against imports of Chinese-made apparel, electronics, machinery, and other consumer goods across the board, it will be up to Obama himself to deal with the hassle.

Obviously, not everyone knows protectionism is a bad idea. By erecting trade barriers, including raising the tire import tariff from 4 per cent to 35 percent, it is hardly able to save American jobs, because cheap tires (and other goods) are produced everywhere, not just China. In this increasing globalized world, it just doesn't make sense to alienate a heavyweight trading partner.

And, protectionism will only hurt oneself and lower a country's economic competency, and prolong a year-long global recession, as it has been proved in history.

The article represents the author's view only. It does not represent opinions of People's Daily or People's Daily Online.



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