China-U.S. Trade Law : International Trade Lawyer & Attorney : Baker Hostetler Law Firm : Trade Remedies, Customs & Export Controls

General Motors And Subsidies

Just one year after investing $51 billion and acquiring a majority (61 percent) stake in General Motors, the Obama Administration, through the company’s Securities and Exchange Commission (“SEC”) filing on August 18, announced plans to begin selling the government’s stock and return the company to private control and ownership. The announcement was a cause for celebration on many fronts: the investment appears to have paid off, saving the company and its workers from bankruptcy and unemployment; returning capital to the American taxpayer ($6.7 billion having already been repaid); avoiding the multiplying effects of a failed corporation with thousands of suppliers themselves employing tens of thousands of workers all over the United States.

Some of the celebration was muted. There were doubts whether the stock sale would recoup all of the taxpayers’ money. The sale of shares will be gradual and the government will continue as a major (but not majority) shareholder. There remained no guarantees that General Motors would ever fully recover from its near-death experience. New General Motors leadership, although coming from the top ranks of major companies (the new CFO was CFO at Microsoft, for example), has no automotive experience.

The most serious concerns are that General Motors’ future depends, above all, on sales in China and Brazil, while its principal innovation, the all-electric Chevrolet Volt, is due to be introduced at a high price and with boundless uncertainty this year. The SEC filing acknowledges that the Volt depends on a battery technology “that has not yet proven to be commercially viable.”

Both the celebration and the concerns resonate with the trade law. They also present new political and diplomatic challenges for the Obama Administration. U.S. trade law and policy, dating back to the 1988 Omnibus Trade and Competitiveness Act, treat government equity infusions into private enterprises as subsidies.

In the highly publicized infusions of capital into General Motors, the United States was rescuing a company that the United States said would have gone bankrupt. The free market premises of the trade law dictate that a company that would go bankrupt without government help produces nothing but subsidized products thereafter. The subsidies could be extinguished only through market transactions eliminating all of the government equity, and even then an argument remains that no new merchandise would have been produced but for the government intervention. For the last year, GM has been unmistakably a state-owned enterprise, and the American interpretation of the WTO’s Subsidies and Countervailing Measures Agreement may permanently handicap GM’s international sales.

An American State-Owned Enterprise In China

The challenge for GM is acute in China, which has become GM’s leading market and the focus of its projected growth. The Obama Administration on August 26 proposed fourteen regulatory changes in the Department of Commerce’s Import Administration, including seven aimed directly at non-market economies and one that would make the products of state-owned enterprises almost automatically subject to allegations of unfair subsidies. Most of China’s automotive production is state-owned, and GM’s largest effort in China is in a joint venture with a state-owned enterprise. GM has been for the last year, unmistakably, a state-owned enterprise itself.

Were China and the United States developing and producing automobiles and parts only for their own markets, they might each choose to ignore the implications of state ownership and equity infusions. They might be subject to WTO complaints from the private makers of cars in other countries trying to compete in China and the United States because, as third country competitors, they would be disadvantaged, but such complaints are rare and difficult. China and the United States, however, are not circumscribing their own ambitions. Both are trying to claim green high ground, developing automobiles and components that will be more environmentally friendly. They are competing with one another to this end, but also cooperating. Both, separately and together, want to market their products around the world. The rest of the world could reasonably treat these products as unfairly subsidized.

The thirteen-year-old joint venture between GM and state-owned S.A.I.C. Motor Corp. of China (the former Shanghai Automotive Industry Corp.) is planning to develop small, fuel-efficient automobile engines and advanced transmissions. The joint venture for engines and transmissions, part of GM’s strategic plan to become greener, is aimed expressly at the Chinese market, but the joint venture is also planning to manufacture small cars together in India, and to market the engines and transmissions around the world.

Using Green To Buy Green

However worthy the green cause may be, and however dependent its success may be on government help, the products of the GM-SAIC joint venture are subsidized and probably in violation of WTO agreements. Nor is the problem limited to engines and transmissions, or even whole cars. On September 12, U.S. Energy Secretary Steven Chu traveled to Livonia, Michigan to tout the success of government financial support for A123 Systems, a manufacturer of lithium ion batteries destined for electric cars. At least $550 million of the government’s $789 billion stimulus program has gone to plants making such batteries, the leading edge of $2.4 billion committed to electric car development. The CEO of the company in Livonia volunteered, “This money was instrumental in the decision to put manufacturing in North America. We think that without this, it’s very unlikely that plants of this size and nature would have been happening in the U.S.” He might just as well have hung a sign around his neck with an arrow to the plant reading, “This way to our subsidized products.”

China committed in 2010 to a program of “indigenous innovation” that features attracting new technologies from other countries. It welcomes the innovations from GM in its joint venture, but also wants to convert American ingenuity into Chinese ownership. GM, now selling subsidized vehicles vulnerable to WTO challenge, may have no choice but to transfer technology to China in order to remain prosperous in the Chinese market.

China’s fourth largest automobile manufacturer began as a producer of batteries. BYD believes that its battery-driven electric vehicles will claim first place in the world market because of its leadership in developing batteries. BYD is not likely to welcome the Chevrolet Volt, GM’s highly subsidized battery-driven car, nor GM-SAIC products incorporating American batteries, into the Chinese market. Yet, BYD may be a beneficiary of the joint China-U.S. program for the development of electric cars, launched during President Obama’s visit to Beijing in November 2009. That program began with more than $150 million from the two governments.

Solving The Subsidies Problem

We warned in December 2008 that massive U.S. government bailouts of banks beginning in September 2008 demanded a change in thinking about countervailable subsidies.  Practically every major American bank had been deemed uncreditworthy and was lending money borrowed from or granted by the federal government. All such loans arguably were subsidies countervailable on goods an American producer borrowing from those banks might sell abroad.

The bailout of the U.S. automobile industry was an even more direct subsidy, financial contributions committed to the very survival of companies. And in looking forward, subsidies were targeted as much as possible on green technologies, on innovation, on reducing carbon footprints. There was no bigger target, because of the environmental damage it does, the jobs it provides, and the financial difficulty it was in, than the automobile industry. And within the automobile industry there was nothing more promising than electric cars.

When Premier Hu and President Obama met in September 2009 in Beijing, one of their few achievements was to create a joint foundation, jointly funded, for the development and promotion of electric vehicles.  Since that time, however, there is no indication that either country has put up its share of the money, or agreed on where the foundation should be located, exactly what it should do, and who should lead it. Like the temporarily calming effect of another cooperative agreement between China and the U.S., the electric car agreement may have muted the Chinese subsidies investigation into U.S. cars, but appears a year later to have done nothing to advance the agreement’s public and official objectives.

Contradictions now litter the trade battlefield, particularly over subsidies and green technologies. While the Obama Administration applauds achievements through subsidies to the automobile and battery industries, especially celebrating the implications for the development of green technologies in Michigan, House Ways and Means Committee Chair Sander Levin (D-Mich) is pressuring the Administration to launch a WTO case, upon a petition from the United Steelworkers, alleging Chinese subsidies to green technologies.

Japan seems to have beaten Levin, indirectly, to the punch. In mid-September, Japan challenged the Province of Ontario’s Green Energy Act at the WTO, alleging unfair subsidies for the development of solar and wind power. It is a direct challenge to national policies favoring local companies in their quest for a reduction in greenhouse gas emissions, what the Steelworkers are asking the United States to challenge in China, and what China could surely then challenge in the United States, particularly in the cash infusions in Levin’s own Michigan.

China and the United States might want to reach an accommodation, a mutual recognition of subsidies for automobiles, especially electric cars and their components, but also for other green technologies. Without such accommodation, GM faces a potential threat of effective banishment from the Chinese market, and potential loss of its joint venture once its technology has been transferred. Accommodation on the trade law, however, requires political and strategic accommodations, which may not be forthcoming.

China denies any correlation between state ownership and subsidies, and the United States insists that the temporary infusion of equity, whether into banks or GM, was a limited, temporary market transaction in which corporate management remained private. Both China and the United States insist that their automobile manufacturers operate independent of state direction, on market principles. An accommodation accounting for WTO rules would require each to admit that state ownership and equity infusion probably have violated the SCM. Otherwise, no accommodation would be necessary. Neither is likely to contemplate such an admission, however, and so both must continue to live under threats, the United States menacing state-owned Chinese enterprises and Chinese policies and practices enhancing exports, the Chinese launching investigations into U.S. subsidies while advancing an industrial policy of “indigenous innovation” promoting joint ventures as long as they deliver to China new advantages in technological change.

Either cooperation to reduce greenhouse emissions, or Japan’s initiative against Canada, will define the future. Either state intervention will be condoned in a financial crisis, or will be punished under world trade rules. There is an urgent need to address these questions before, one by one, technological innovations and world trade initiatives are derailed by the very international trade agreements intended to encourage both.
 

• Email This
• Print
• Comments
• Trackbacks
• Share Link

Editor's Note:  Amelia Lo, the author of this article, is a Chinese law student in Hong Kong who was a foreign intern at Baker & Hostetler LLP during the summer, 2010.

According to United States Senator Charles Schumer (D-NY), a strident critic of China’s currency policy, “[the] most important issue in the Chinese-American relationship is currency.”  Schumer and other American critics often have used the term “currency manipulation”, fraught with negative connotation, when referring to China’s currency policy.  To appreciate the perspectives of two distinct sides in this debate, it is probably better to find more neutral language.  Governments may control the value of their currency, whether through the money supply (the actions of the American Federal Reserve Bank) or by floating on world currency markets.  Consequently, reference to “currency control” instead of “currency manipulation” might facilitate a dialogue that, to date, has been confrontational and full of accusations.

An Overview
China pegs its currency to the U.S. dollar at about 6.827.  In May, 2010, the trade deficit between China and the US was “the largest imbalance with any country”.  In June, the US trade deficit had reached nearly $50 billion, the largest figure in two years.

During 2010, there have been a number of bilateral meetings between Premier Hu of China and President Obama of the United States.  On June 19th, China’s central bank announced that it would reform “the formation mechanism of the Yuan exchange rate to improve its flexibility”.  The United States interpreted this announcement as an important Chinese concession, and looked forward to a significant and rapid adjustment in the exchange rate between the yuan (or “renminbi”or “RMB”) and the dollar.  There may have been exaggerated expectations of instant and significant market changes following China’s announcement, but only two small adjustments have occurred since June 19 and it may be too early to evaluate China’s new exchange rate policy.

The U.S. Point Of View
There seems to be an American consensus that China is manipulating the exchange rate of its currency, preventing it from floating free on world markets, to gain a trade advantage for an export-led economy.  The mainstream American media project this view, consistent with frequent expressions of American politicians, that China is manipulating its currency by maintaining a very low value for the yuan in trading with the dollar and other currencies.  Some, like Rep. Sander M. Levin (D-Mich.), even blame the unemployment problem in the U.S, perhaps the leading issue in the midterm elections, on China’s currency policy.

Although President Obama and Treasury Secretary Timothy F. Geithner have urged China “to allow the yuan to float higher,” they have been sensitive to potential Chinese reaction and value the U.S.-China relationship enough to avoid directly naming China as a currency manipulator in their annually mandated report to Congress.  They postponed delivery of the report until China had indicated some movement on the currency, enabling them to soften the criticism they otherwise were encountering.  They welcomed China’s June 19 announcement, but were concerned about how China’s promise to make its currency more flexible would affect U.S. China trade in practice. On 16 September, 2010, Secretary Geithner promised Congress that they, with other countries, will put pressure on China for “trade and currency reforms” in the next G20 summit in November in Seoul.

Although they have proposed different solutions to combat alleged currency manipulation, some more drastic than others, at least 130 US senators and representatives, Democrats and Republicans alike, disagree with China’s currency policy. Senator Charles E. Grassley (R-Iowa), the ranking member of the Senate Finance Committee, urged the Administration to name China as a currency manipulator.  Going a step further, Congressman Levin (D-Mich.), Chairman of the House Ways and Means Committee, urged the Administration to monitor closely China’s progress and take appropriate action by filing a complaint against China at the WTO alleging violation of Article XV of the General Agreement on Tariffs and Trade.

While Levin and Grassley, key Democratic and Republican members in Congress, agree that the Administration should do more to influence China to take more significant steps to appreciate its currency, Senator Schumer and Reps. Tim Ryan (D-Ohio) and Tim Murphy (R-Pa.) have sponsored bills in the Senate and the House, such as the Currency Exchange Rate Oversight Reform Act 2010, intended to force the U.S. Commerce Department to obtain a trade remedy against China if its currency is undervalued.

Some American manufacturers argue that the Chinese yuan “is undervalued by as much as 40 percent” and that the undervaluation acts as an unfair subsidy to Chinese goods.  Scott Paul, the executive director of the Alliance for American Manufacturing, has called on Congress to pass “strong legislation to penalize China’s currency manipulation”, believing that such congressional action would decrease the U.S. trade deficit.  Another lobbying group, the Committee to Support U.S. Trade Laws, along with some 47 manufacturing groups and unions that make up the “Fair Currency Coalition”, support Senator Schumer’s legislative efforts to pass “an effective, WTO-consistent trade remedy without further delay.”

Despite the congressional pressures and pressure from American manufacturers, China is not without defenders in the United States.  The US-China Business Council and the U.S. Chamber of Commerce agree that the exchange rate is a serious problem, but both contend that legislation treating currency control as a subsidy subject to countervailing duties is not a good way to achieve the goal of rebalancing the yuan.  These associations think it wiser for the Administration to continue “its current approach of using multilateral and bilateral persuasion to achieve Chinese exchange rate reform” and to wait and observe the results.  The Commerce Department’s recent ruling in late August, 2010 that China’s yuan value cannot be “considered a direct subsidy to Chinese exporters” is a wise move as it avoided the direct confrontation of trade and currency issues.

China’s Point Of View
The Chinese Government strongly denies allegations of currency manipulation and rejects claims that the yuan is undervalued.  Premier Wen Jiaobao and the Chinese Foreign and Commerce Ministries are all of the view that China’s goal of a stable currency benefits the world at large, especially during the financial crisis.

Premier Wen maintains that China aims to continue to provide a stable currency and “steadily advance the reform of the formation mechanism of the RMB exchange rate under the principle of independent decision-making, controllability and gradual progress.”  Wen emphasizes that, while “some countries [are applying double standards when they demand the appreciation of the yuan] but at the same time [practice] trade protectionism against China,” China will continue in its goal to work towards trade balance, rather than surplus.

To illustrate the advantage of a stable yuan-dollar exchange, Wen refers to the popular view that “China’s efforts to maintain a stable yuan-dollar exchange rate [despite pressure to devalue] during the 1998 Asian financial crisis helped the world.”  China’s decision to keep its currency stable gave its currency credibility and ensured China’s financial stability after the crisis as “the nation [was able to] focus on improving productivity, quality and cutting costs.”

Foreign Ministry spokesman Qin Gang thinks that the U.S. politicizes the currency issue too much, and in a destructive and negative way.  He argues that, contrary to what U.S. congressmen may expect, “the appreciation of the yuan will neither root out the U.S. trade deficit to China nor solve the low U.S. savings rate or unemployment” problems.  Members of the Commerce Ministry, including Commerce Minister Chen Deming, Vice Commerce Minister Zhong Shan, and Commerce Ministry Spokesman Yao Jian, have reiterated consistently that the U.S. trade deficit will not be solved by a change in China’s currency policy.  Yao ascribes reasons other than the currency policy, such as globalization, for China’s trade surplus.

According to Zhong, the U.S. China trade deficit “is caused by the shift in international division of labor and of industries against the backdrop of globalization.” This theory, he says, was demonstrated in March, when China’s trade surplus briefly fell into a trade deficit under a basically stable exchange rate.  While Yi Gang, head of the State Administration of Foreign Exchange and Deputy Governor of the People’s Bank of China, contended that an official timetable for currency reform was not viable due to unbalanced development in China, he emphasized that China’s major goal in exchange rate reform is to make the yuan a “convertible currency”, one that can flow freely.

According to China’s Yuan Stress Test in March 2010, “half of China’s textile firms may [go] bankrupt if the value of the [Yuan] rises 5 percent against the U.S. dollar, given the industry’s thin profit margins.”  Such job losses could affect as many as 20 million civilians directly engaged in the textile industry, and another 140 million working in cotton farming.  Such indicators lead Chinese authorities to insist that the yuan’s convertibility is an internal affair, and that China will not sacrifice its domestic interests under foreign pressure.

Selected Points Of View Of Scholars
There is a variety of views on this subject: while some support China, many are those who strongly believe that the yuan is undervalued.

Supporters of China’s currency policy include Nobel Prize Laureate Robert A. Mundell, “father” of the Euro.  He remarked in June 2010 that he did not think that China should have a large appreciation in the current situation and that too much appreciation would hurt China’s economy. Another Nobel Laureate, Joseph Stiglitz, contends that the “US’s [act of forcing] China to revalue the RMB is a manifestation of protectionism” and that “the United States putting pressure on China for Yuan appreciation is [not a good idea as it risks] shaking up the foundation of world economic recovery.”

Economist Bai Chong-en of Tsinghua University in Beijing thinks that the yuan is not seriously undervalued.  He further contends that outside pressure on China to reform its exchange rate may do more harm than good in convincing China to allow its currency to appreciate, as “people don’t like to be forced to change things.”  Xia Bin, economist and counselor of the State Council, asserts that the US deficit is caused by the “defective economic structure” of the US but not China’s yuan value.  Huang Yiping, a professor at Peking University, who considers himself  “a strong advocate of greater exchange rate flexibility in China”,disapproves of Nobel Laureate Paul Krugman’s advice to the US government to blame, finger point and confront China for global problems and job losses.

There are strongly-held, contrary views from other leading economists.  Krugman, Fred Bergsten, Director of the Peterson Institute for International Economics, and Robert E. Scott , Senior Economist of the Economic Policy Institute, have repeatedly urged the U.S. government to adopt more aggressive policies such as ‘naming and shaming’ and retaliatory measures against China.  All three scholars blame China for US job losses, though the values they allege vary from about 1.5 million to 3 million. 

Krugman has accused China’s “undervalued” yuan of being a “significant drag on global economic recovery,” and has referred to China’s exchange rate policy as “most distortionary” and “[damaging]” and China’s manipulation to be “self-evident”.  To Krugman, and to Scott, the United States has the upper hand over Chinese exports and the U.S. government should not be afraid to force China into action on the currency.

Bergsten thinks the yuan is undervalued by between “[at least] 25 and 40 percent”.  He claims that China’s 2005 appreciation was not a real appreciation due to China’s increase in productivity. Although Bergsten acknowledges that macroeconomic forces contribute to China’s undervalued currency, he blames the Chinese government for manipulating its currency by “[buying] about $1 billion daily in the exchange markets to keep [its] currency from rising”, and claims these purchases to be the main cause of the exchange problem, in addition to a form of protectionism.

Would An Appreciation Of The Chinese Currency Actually Help The United States?
All things being equal, as economists like to say, an appreciation of the Chinese currency would make Chinese goods more expensive in the US and US goods cheaper in China.  Logically, an appreciation of the yuan therefore would decrease the US trade deficit with China, increase exports, and thus create jobs in the US.  China’s policy helps China in the long run.  But does it help China in the short run, as it may inhibit Chinese manufacturers’ desire to improve the quality of their products, such that they may have a quality advantage in addition to a cost advantage in the future?  Will other countries regard China as a market economy were it to adopt a fixed rather than floating rate?

Concluding Thoughts
The Peterson Institute for International Economics defines one of the criteria for “manipulation” to be “large intervention in one direction over a sustained period that frustrates balance of payments adjustments.”  If that definition were adopted generally, many countries in the world, including the U.S., could arguably fit the description of currency control or manipulation at first glance.  Liam Halligan, a UK-based economist and commentator, argues that “America’s long standing ‘weak dollar’ policy,” which “[allowed] its currency to depreciate in order to lower the value of its foreign debt,” “[amounted] to the biggest currency manipulation [and protectionism ] in human history.”

As Treasury Secretary Geithner wisely understands, the US cannot “force” China to revalue its currency in order “to create a level playing field for American exporters.”  Relentless pressure on China to revalue could harm the U.S. China relationship, which the Administration seems to value more than the narrower issue of currency exchange.  At the same time, the Chinese government should take into account the concerns of the US and conduct more dialogue with the US while it improves the flexibility of its currency.

According to Brookings Institution Senior Fellow Barry Bosworth, focusing exclusively on the exchange rate issue is “a mistake”.  The US government should focus on expanding US exports. Rather than blaming China for its economic problems, the US government should work within its own scope of influence, to formulate strategies that enhance the production capacity of manufacturers, to implement tax saving incentives to encourage employment and help small businesses.

We should not forget that US consumers have benefited from the diversity of low-cost Chinese imports.  If the US were to impose trade restrictions on China’s goods, US consumers would likely have fewer choices.

Time is required for an economy like China’s to transform from being export-oriented to market-based.  Both China and the U.S. are concerned about unemployment. On June 20th of this year, the Chinese government made a promise.  The U.S. should be patient and wait to see the results of China’s promise.  According to recent measurements, the value of the yuan “has risen about 1.5 percent, most of that over the course of [the week before the 15th of September]”, which is quite a promising figure.  Instead of striving for actions that involve blaming, shaming and retaliating, the U.S. government can initiate acts of cooperation, trust and tolerance such as by increasing dialogue at the top, the middle and grass root levels with China so that it can understand China’s plan and policy better, and allow China to understand American concerns.  By working together sincerely and communicating honestly and openly, the leaders of the two governments are likely to be able to reach a successful compromise and consensus on the currency issue.
 

• Email This
• Print
• Comments
• Trackbacks
• Share Link

中文点击这里

Political pressures have led the U.S. Department of Commerce to launch countervailing duty investigations against China while insisting that it cannot use market information from within China to measure the alleged subsidies because China is a non-market economy. That political reality contravenes the principles embodied in U.S. law. Subsidies are found and measured according to the market distortion they cause. Where there is no market, there can be no market distortion. It is not possible for China to have developed markets sufficiently to be subject to subsidies allegations and investigations, yet have no markets by which to ascertain and measure the subsidies.

The problem that pervades the United States’ countervailing duty investigations of China is an attitude, which has at least three manifestations.

1. There is the Department’s confusion of methodologies used in dumping and countervailing duty investigations. In dumping cases involving non-market economies, the law expressly allows the Department to seek out surrogate values from other countries. In theory, at least, this exercise is fairly precise: the cost of a nail in India might substitute for the cost of the same nail in China. The Department, however, has taken to utilizing this methodology in countervailing duty cases where the law does not authorize it and the measurements are not remotely so precise.The consequence is that the Department ignores prevailing market conditions within China in favor of data from hand-selected countries to determine the existence and amount of a countervailable subsidy in China. The Department is having the market issue both ways: China is enough of a market economy for government subsidies to cause distortions, but not enough of one – in any sector – to resort to prices in China that are less likely to show the existence of a subsidy.
2. There is a lack of recognition and appreciation of China’s radical transition to a market economy. The People’s Republic is privatizing, and creating competition, at a feverish pace. Its central planning is indicative and no longer directive; its collectives are giving way to individual entrepreneurs and its controls are yielding to markets. The Department verified that state-owned enterprises are operating autonomously, for profit, without government direction. They are seen as benefiting the people collectively instead of a small group of private owners, but contrary to the Department’s preconceived notions, that collective benefit makes them no less market-driven than privately-owned entities. Many of the changes in China’s economy are taking place in weeks and months, not years or decades. Countervailable subsidy allegations of a practice in June quickly become outdated as the practice disappears in September. The United States’ failure to recognize and appreciate these changes is a bad policy toward China because it carries all the wrong incentives: offsetting programs that have been abolished or expired creates liabilities that discourage abandoning the programs, or beg for replacements. It teaches all the wrong lessons about opening markets, because what it really communicates is that the United States is closing its own.
3. There is the allegation that officials of the People’s Republic of China do not always cooperate with the Department or do all they could to answer questions and assist with the Department in its investigation. The allegation is worse than undiplomatic. It violates the comity of nations by refusing to respect the acts of foreign sovereigns within their own jurisdictions. By presuming that China must collect and have information that, within its own jurisdiction it says it does not collect and does not have the Department violates a principle respected formally by the United States since the Supreme Court first pronounced on it in 1797. This third manifestation of attitude – the willingness to deny the veracity of official testimony without contrary information or evidence – tarnishes the Department’s investigations. As a matter of comity, the Department owes good faith respect to Chinese officials as it would expect them to respect officials of the Department.

Comity is not merely an element of diplomacy. It is an obligation of international practice and a legitimate expectation of our friendly trading partners. Chinese officials are entitled to be believed absent strong evidence to the contrary. The Department breaches its trust when it makes decisions based on nothing more than hostile beliefs. Insisting something must exist when told it doesn’t, and having no evidence to the contrary, is nothing more than a hostile belief. What is at stake is much more than the fate of any particular exported product. What is at stake is the good faith of American trade relations with China.

Hostile attitudes ought not to interfere with respect for the law and sound policy. In this instance, there is an additional concern. Much of the American objection to alleged Chinese subsidies could now be said, at least since September 15, 2008, about the United States. It probably has been necessary to combat global rececession with massive government economic interventions, but it has made much more of the American economy dependent on government support. We analyzed those troubling contradictions in formal comments filed with the United States Trade Representative in January 2008 on Applying the CVD Laws to China.
 

• Email This
• Print
• Comments
• Trackbacks
• Share Link