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Evening the trading field

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BOB MOON: There’s word this morning that the Bush administration may be ready to turn the tables on the Chinese over those soaring trade deficits. As early as today, U.S. industries may get another legal tool to wield against what they complain is unfair competition from China. Marketplace’s Scott Tong joins us now from our Shanghai bureau. Scott, what’s the change here? It’s been my understanding that U.S. companies have already been able to sue Chinese firms for playing unfair.

SCOTT TONG: Well that’s right, they can allege dumping, which is selling products below market value. And if a U.S. company goes through the process and wins the case, then the Commerce Department can impose penalties against the foreign competitors from China or anywhere else. What would be new is another weapon for U.S. companies to go after, in their view, Chinese competitors who they say are playing unfair in a different way, that they’re getting unfair subsidies from the Chinese government — everything from special grants to super-low tax rates to loans with very nice terms. Now they’ve wanted to do this, but for 20 years these U.S. companies have kind of run up against this stop sign at the Commerce Department

MOON: So Commerce is now changing its mind here?

TONG: Well as early as today there’s anticipation that the Commerce Department will come out and announce that. The case before us has to do with a U.S. paper company and the reason so many industries are watching this is because then the door would be open. The U.S. steel makers, the textile makers, the shrimpers, they’re all watching this in case they can get in line and file their own cases using this new legal weapon. Now, the upshot of all this is it takes the U.S.-China trade relationship, which is already strained, and it strains it even more.

MOON: Yeah, I know just yesterday the Chinese foreign ministry was saying, ‘look we want to solve these problems, we’re going to have to approach this from a point of mutual respect,’ but this sounds more like conflict.

TONG: Not hearing a lot about mutual respect at this point, right? There’s already the tensions over the currency, there are WTO spats going on, and the trade gap gets wider and wider. And what’s interesting is from the perspective of American companies in China, a chillier relationship doesn’t help them at all.

MOON: Well if nothing else it’s going to be interesting to watch this play out. Scott Tong in Shanghai thank you very much for joining us.

TONG: Alright Bob thanks.

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