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China: House’s bill violates WTO rules

Rob Schmitz Sep 30, 2010
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China: House’s bill violates WTO rules

Rob Schmitz Sep 30, 2010
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STEVE CHIOTAKIS: Legislation to penalize China for
manipulating its currency made it past one hurdle — passage in the U.S. House. If the Senate goes along, the new law would allow the U.S. government to slap tariffs on countries such as China that undervalue their currencies, making their goods cheaper than American products.

What does China have to say about all this? Here’s Marketplace China bureau chief Rob Schmitz.


ROB SCHMITZ: For all the vitriol spewed at it from Capitol Hill, China had a cool and collected response. A spokesman for China’s Commerce Ministry shrugged off the vote, saying if the bill passed into law, it would breach the rules of the World Trade Organization.

BRYAN MERCURIO: Honestly, I think the Chinese ministry is right. I think it would be a violation.

Bryan Mercurio is an expert on WTO law at Hong Kong University. He’s one of several trade lawyers we spoke to who said the law would be a clear violation of WTO rules. Mercurio says the U.S. is in a tough position.

MERCURIO: They could bring China to the WTO and claim a breach of the subsidies agreement, etc., or they could take their domestic action and then let China be the one who brings the case. I mean, I think there are risks to both strategies here.

And he’s not even mentioning the risk of success. If the U.S. were to persuade the WTO to punish China for manipulating its currency, it wouldn’t mean the renaissance of U.S. manufacturing, says Mercurio. It would just mean more cheap goods would start coming from places like Vietnam and Indonesia instead.

In Shanghai, I’m Rob Schmitz for Marketplace.

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