Tuesday, March 28, 2006

America's Favorite Whipping Boy

--Referring to China here. China seems to have become the target of many potential congressional actions lately. The SNOOC controversy didn't take place too long ago.

Word has it that Senator Charles Schumer (D-N.Y.) and Senator Lindsey Graham (R-S.C.) are hoping to introduce a new bill calling for a retaliatory 27.5% tariff on all Chinese imports if the Yuan is not revalued 180 days after the trade talks. Working in the background are concerns that trade deficits haven't alleviated since the Yuan was unpegged last year. According to the report, imports from China account for nearly a quarter of the record $723 billion U.S. trade deficit. The failure to prevent widespread intellectual property violation is also a major concern to politicians, especially when reelection pressure sinks in for many.

The bill has been brewing for more than a year, as it won support in a Senate test vote a year ago. Now it has become a rather urgent issue for the introducers of this bill, as they would like to press for a vote in the Senate soon, even as soon as March 31. Yet things are probably not happening until the two senators come back from their China trip, hopefully with new perspectives that are conducive to dialogue and collaboration, rather than retaliatory measures.

An issue that comes to mind immediately is the implication for the two countries' respective WTO obligations. Disputes may arise in the WTO if the U.S. passes this tariff, and it can be years to come before the trade relation can normalize.

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