Bush Moves On China Trade Draw Widespread Criticism

WASHINGTON — Democrats are pushing President Bush to get tougher with China and the administration is responding, imposing tariffs and filing complaints about counterfeiting and trade barriers.

The White House's moves have angered China's leaders, but have not placated many U.S. lawmakers who call the actions too little, too late. Meanwhile, some free traders say the moves could backfire against U.S. consumers, businesses and taxpayers.

Proponents of a tougher approach to China say the White House must do more to slow the flood of Chinese goods now swamping the U.S. market. Just between 2001 and 2006, this country's annual trade deficit with China shot from $83 billion to a record-smashing $233 billion.

"It's high time the U.S. did more to protect Americans," Senate Finance Committee Chairman Max Baucus, D-Mont., said in a statement.

Many Democrats, along with some Republicans, argue that by intentionally holding down its currency's value and erecting trade barriers, China gives itself an unfair advantage, which causes manufacturing job losses in the United States.

Meanwhile, lax Chinese enforcement of copyright laws is causing U.S. makers of movies, music and software to lose about $2.5 billion in sales, according to industry estimates.

While the White House actions "are welcomed," they are insufficient, said Alan Tonelson, trade policy analyst for the U.S. Business and Industry Council, which represents small businesses hurt by Chinese imports. "We need much more sweeping responses. Compared with the scope of the China problem, this all adds up to very little," he said.

But some free-trade supporters fear the Bush administration's tougher stance could cause more U.S. companies to demand higher duties on Chinese imports, which in turn would harm U.S. consumers, especially poorer ones who benefit from inexpensive imports.

More trade protections "could affect a range of goods on the shopping lists of millions of Americans, including apparel, toys, electronics and sporting goods," said Dan Griswold, director of the Center for Trade Policies Studies at the Cato Institute, a research group that supports free trade.

In addition, if China were to retaliate by imposing its own new tariffs, U.S. exporters would suffer. While China sells far more goods to the United States than it buys, the tide is turning as the Chinese become wealthier and start to purchase more of our goods, he said.

"Exports to China have been growing exponentially," with U.S. companies shipping soybeans, wheat, aircraft, semiconductors and services, he said. Commerce Department statistics show exports to China increased by 31.7 percent in 2006, while imports rose only 18.2 percent during the same period.

Finally, "any disturbance in U.S.-Chinese commercial relationship could curb their investments in the U.S. economy," Griswold said. A drop in the Chinese appetite for U.S. Treasury bonds "would cost us as taxpayers," who would have to offer higher interest rates to attract other investors to replace the Chinese.

Griswold said he believes the administration is taking its protectionist steps to try to prevent Congress from passing even harsher measures.

The White House has toughened its position three times recently:

— In February, it filed a complaint with the World Trade Organization (WTO) to stop what it called China's illegal subsidies to exporters.

— In March, the Commerce Department announced duties ranging from 10.9 percent to 20.35 percent on high-quality paper from China, which U.S. competitors say benefits from unfair subsidies.

— Last week, U.S. Trade Representative Susan Schwab announced the U.S. is lodging two WTO complaints against China for lax enforcement of intellectual property rights and barriers to trade in music, movies and books.

Schwab said that despite the series of actions, "there is no trade war, per se, between China and the United States."

Still, Chinese leaders responded with "great regret and strong dissatisfaction," saying they have been making copyright protection a priority and are enhancing enforcement, according to Wang Xinpei, a spokesman for China's Commerce Ministry.

In a statement posted on a government Web site, Xinpei said the U.S. complaints "seriously undermine the cooperative relations the two nations have established" for settling trade problems.

The administration's moves have come just before the second round of the so-called "U.S.-China Strategic Economic Dialogue." The talks, led by Treasury Secretary Henry Paulson, began in Beijing last December and will continue in Washington next month.

Paulson is expected to continue to press Beijing to adopt a more flexible currency. In recent months, the Chinese have been allowing their currency, the yuan, to rise against the dollar, making U.S. imports cheaper there.

But U.S. critics say the pace of reform is not quick enough. Tonelson said Congress should pass legislation to force China to dramatically revalue its currency, rather than depend upon the administration to reason with Chinese leaders. "I hope members of Congress won't be fooled" by next month's talks, he said.

On the Web:

China's Commerce Ministry: english.mofcom.gov.cn

U.S. Trade Representative: www.ustr.gov