Yesterday, the World Trade Organization (WTO) ruled that China had illegally blocked the export of Chinese raw materials. Chinese tightening of raw material exports had the effect of artificially reducing prices for Chinese goods, because non-Chinese manufacturers couldn’t obtain materials as cheaply as Chinese firms could.
“The panel found that China’s export duties were inconsistent with the commitments that China had agreed to in its Protocol of Accession,” WTO judges said in a summary of its ruling. “Export quotas imposed by China on some of the raw materials were inconsistent with WTO rules.”
U.S. trade officials were quick to praise the ruling. The finding is “a significant victory for manufacturers and workers in the U.S. and the rest of the world,” U.S. Trade Representative Ron Kirk told Bloomberg News.
While some praised the ruling, however, United Steelworkers President Leo Gerard said the WTO ruling showed that much more needed to be done to stop China from distorting markets.
“Kirk flagged the distortions caused by the export restraints on key raw materials. These restraints are not just used on the products subject to today’s decision but to rare earth elements, antimony, tungsten and many other products critical to green technology and other industries where China is succeeding by rigging the competition,” Gerard said in a statement.
Union officials officials including Gerard and AFL-CIO President Richard Trumka have long argued that in order to protect U.S. manufacturing, the United States must more aggressively enforce existing trade laws with the WTO and other organizations that regulate trade.
In order to file a complaint with the WTO accusing a country of illegal trade practice, the U.S. Trade Representative Office must do months, sometimes years, of investigation to prove damages being done in the United States and show that the Chinese are intentionally breaking the law. The process is slow and would require a dramatic expansion of resources dedicated to pursuing such complaints with the WTO in order to make trade law enforcement effective.
Many point to the issue of Chinese currency manipulation, which labor leaders like Gerard and Trumka say dramatically cheapens Chinese goods, as an issue that the United States has not moved aggressively enough on.
“The Obama administration deserves to be commended for its pursuit of this case and its focus on enforcement. Trade enforcement isn’t an esoteric issue, it’s about jobs. Unfortunately, China’s illegal, predatory and protectionist policies cover a substantial portion of its economy and that has allowed it great success at the expense of the U.S. manufacturing base and American jobs” Gerard said. “Still, a case-by-case approach takes time and allows China to get away with far too much. We need to accelerate action and also deal with issues like China’s currency manipulation to help level the playing field.”
While the United States Congress is now considering expanding free trade to Korea, Columbia and Panama, it’s a good time to note the difficulty of enforcing existing trade laws. If we can’t consistently enforce them, how will the U.S. government be able to ensure that Korea, Columbia and Panama play by the new rules?
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