As the world collectively struggles to deal with the financial crisis, the U.S. took mutually harmful measures two days ago by imposing a punishing three-year tariff on Chinese car and light truck tires. A compromise, or capitulation, to domestic political pressure, this serious trade protectionism violates WTO regulations. Given the current global economic climate, Obama’s government is setting a terrible example and ruining the U.S. supposed free-trade supporting image.
Trade protectionism is a dead-end, because such unfair, unreasonable measures inevitably end up harming the both countries involved. Not only futile in solving the United Steelworkers’ unemployment problem, these tariffs will also seriously affect tens of thousands of people working in tire import, sales, warehousing and other fields that depend on Chinese imports. It will even hurt US consumers and weaken the government’s ability to revive the automobile industry.
This tariff violates U.S. promises made at the G-20 financial summit. According to an AP commentator, Obama denounced trade protectionism and wishes to express his support of free trade in anticipation of the upcoming Pittsburgh financial summit. Unfortunately, other nations are likely to view tire protectionism as a test of this commitment. The article points out that the “Buy American” provision of last year’s economic stimulus plan already aroused suspicion among other nations, who think the U.S. only decries trade protectionism when its own industries are not threatened.
What a shame that the trade issue should become the victim of domestic political wrangling. The U.S. government is ignoring the vehement protests of importers, dealers and the Chinese government in order to curry favor from an interest group and obtain support for Obama’s health care reform. According to Gary Hufbauer of the Peterson Institute of International Economics, health care reform is at a stalemate, and to reach a compromise, Obama is unwilling to alienate union-supporting Democrats over issues such as tire trade.
The worst global recession since the World War II has started to stabilize and show signs of improvement, but the road to recovery is full of uncertainty. As the world’s greatest economic power, the U.S. is sending the wrong signal by renewing trade protectionism at this critical juncture. As WTO deputy director-general Alejandro said, imposing punishing tariffs on Chinese tires does not benefit trade or recovery of the global economy.
Trade protectionism hurts everyone. The U.S. should learn from its unwise policies of the Great Depression, when it took the lead in spiking import tariffs, exacerbating the crisis and setting off world-wide trade wars. Seventy years later, it should not be repeating history’s mistakes. As stated by Patrick Rosenstiel, executive director of the Trade Alliance to Promote Prosperity, the government should be creating more jobs, because economic recovery lies in reasonable rather than confrontational economic policies.
I must respectfully disagree on several points, Mr. Jinwei.
First of all our elected representatives have lost sight of the fact for years that “We The People” have every right to determine what role we will allow trade with other countries to play in our society.
It is a means to an end only, namely creating a just, equitable and prosperous society for the most people possible; but sadly one tool that has proven irrefutably to have played a devastating role in declining living standards for the vast majority and obscene profits for the very few.
As to your undoubtedly genuine concern for all of those American workers dependent upon the wages they earn participating in importing and distributing those goods we mostly used to manufacture ourselves; these jobs largely pay half of the wages earned by skilled manufacturing workers in small communities across America – these high paying jobs were the anchors of our villages and towns that allowed middle classs workers to send their kids to college and enjoy a modicum of comfort in their retirements – no more.
Also, the actual effect of protectionist trade policies in the throes of the Great Depression have been estimated by Nobel winning economists to have been only 2-3% of GDP.
Your critique of our stimulas money being directed largely to American companies is interesting in light of China’s own stimulas directive to spend your own domestically – something I entirely agree with by the way. I’d venture a guess your country will far more successful at that than mine.
There are many other groups like the Peterson Institute that have grown powerfully in America over the last forty years with two primary goals:
1) Spread disinformation and propaganda to manipulate ignorant American workers into voting against their own self interests and our Democracy.
2) Continually exploit the results for the obscene gain of the very few oligarchs allowed into the club – while they discuss ways to gain more power, money, and influence over our bought and paid for corporate servant politicians.
We hope to change that now. I’m confident our respective peoples can figure out a way to trade fairly without decimating our societies or our planet.