KAI RYSSDAL: And we’ll grant you that on the face of it, the announcement this Friday morning from the Commerce Department didn’t sound like much. The U.S. is slapping tarrifs on imports of some paper products from China. Because, the administration said, they’re unfairly subsidized. So far…just run of the mill trade policy.
Hold on a second, though. Because for decades Washington’s looked the other way when developing economies gave their domestic manufacturers a helping hand. That was before the White House came under fire from U.S. industries and congressional Democrats. So the Bush Administration has decided China’s not a government-run, nonmarket economy anymore. Our Washington bureau chief John Dimsdale reports.
JOHN DIMSDALE: The Commerce Department says imports of Chinese sheet paper increased 177 percent over the last two years. The U.S. says Chinese government subsidies helped make their paper cheaper.
Commerce Secretary Carlos Gutierrez says now that China is a player in the global economy and is beginning to make free-market innovations, it’s time they played by the rules.
CARLOS GUTIERREZ: China is a rising economic power, and the U.S. welcomes the innovation and efficiencies that result when our companies and industries compete.
The duties will add as much as 20 percent to the price of Chinese paper. The Commerce Department’s turnaround comes after a complaint filed by an Ohio paper maker that its Chinese competitors unfairly benefit from special tax breaks and government-subsidized loans.
University of Pennsylvania China expert Jacques deLisle says if these proposed sanctions are approved, paper will only be the beginning.
JACQUES DELISLE: Once you open the floodgates to countervailing duty claims, which attach much larger penalties, then in fact anti-dumping duties do, then a lot of industries will follow on. And you will see furniture companies and textile companies and consumer goods companies quite possibly piling on.
And quite possibly resulting in a trade war. Especially if China decides to push back with its own retaliatory sanctions.
But, deLisle says, there are plenty of industries on both sides that benefit from barrier-free trade and will lobby against the proposed duties. A final ruling is due before mid-October.
In Washington, I’m John Dimsdale for Marketplace.
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