US protectionism calls for a response
- Source: Global Times
- [03:15 September 14 2009]
- Comments
US President Barack Obama made a controversial choice Friday by imposing a stiff tariff on Chinese tires for cars and light trucks.
The decision shows that the interests of the Chinese people are again being held hostage to the domestic political situation of the US.
Obama's unwise move to levy the tariffs will likely result in a chain reaction, with the European Union, whose member nations are major buyers of Chinese tires, following suit. The case will probably be taken to the WTO for adjudication.
This is not a win-win situation. Does the Obama administration realize the high tariffs imposed on Chinese tires are an abuse of the special protective measures under the rules of the WTO? It is also a violation of the say-no-to-protectionism commitment Obama made during the G20 London Summit and on numerous other occasions. It will damage bilateral economic relations between China and the US.
There is no doubt Obama knows this. But winning maximum public support for his healthcare reform is at the top of the US president's domestic agenda right now.
Obama is hoping his decision on Chinese tire tariffs will buy him support with organized labor for his healthcare bill. One of the most important promises in his election campaign, Obama's plan to overhaul healthcare has been under attack by opponents, with thousands of protesters venting their fury at a gathering in Washington, D.C. Saturday.
It is not the first time the US government has sacrificed healthy growth in bilateral trade to domestic political interests.
Whenever a thorny domestic political or economic issue is confronted, the US government shifts the public attention to "Made-in-China"imports or bilateral relations with China, as if China holds the key to all the US's domestic problems.
But China will never accept being a scapegoat for those problems. Imperiled by protectionist US measures, China can't just accept the situation and tolerate the pain. China doesn't want to ignite a trade war, but it can still choose to fight back against the measure, as several Chinese industry groups have warned.
With its rapid economic growth and rising international influence, China now has more cards to play. Not only is China the largest creditor of the US, but China's economy has also rebounded fast without having to rely a lot on exports.
The Chinese government has made it clear that it will protect the interests of its domestic industries and reserves the right to take further action.
The Obama administration is doing a favor for Big Labor in the US, but China now has to make choices of its own. A trade war would be regrettable, but creating a long-term deterrent to US protectionism may require retaliation.
