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Sino-US trade dispute amid US trade protectionism(11/25/03)

   Soon after the United States government announced its decision last week to impose import quotas on three Chinese textile products, critics began denouncing the policy, warning of increasing trade protectionism in Washington.

    The announcement on November 18 will affect Chinese exports to the United States of knitted fabrics, dressing gowns, robes and bras.

    Announcing the action, US Commerce Secretary Don Evans said it "demonstrates the Bush administration's commitment to our trade rules and America's workers."

    But two days after the announcement, Federal Reserve (Fed) Chairman Alan Greenspan strongly warned that "creeping protectionism" could jeopardize US efforts to narrow trade deficits.

    "Some clouds of emerging protectionism have become increasingly evident on today's horizon," Greenspan said in a speech to a monetary conference.

    Although Greenspan did not single out the protectionist moves, what he pointed his finger at is very clear.

    His comment was made at a time when the Bush administration has been criticized for imposing high tariffs on foreign steel to protect the US industry, and for imposing quotas on certain types of Chinese textiles and clothing in response to pleas from the US textile industry.

    "The costs of any such protectionist initiatives, in the context of wide current account imbalances, could significantly erode the flexibility of the global economy," Greenspan warned.

    The US government has long been critical of sharp increases in Chinese product exports and the consequent surging of US deficit in bilateral trade with China. Washington has asserted that the deficit has contributed to the slowing of US economic growth over the past two years.

    But Greenspan has a different view on the matter.

    "Spreading globalization has fostered a degree of international flexibility that has raised the possibility of a benign resolution to the US current account imbalance," he said.

    Rising globalization, says Greenspan, had made the United States and other economies more flexible and thus more able to correct economic imbalances such as trade deficits when they occur.

     Some US newspapers have also criticized the US government's decision to impose import quotas on Chinese textile products.

    On November 19, the Wall Street Journal said in an article headlined "The Great Brassiere War" that this was the same justification the White House used for its now-discredited steel tariffs.

    It said the US quotas imposed on Chinese brassieres "is especially strange because we're not aware of a single US factory that still makes them."

    The paper said that in political terms, imposing the quota was a payoff to some US Congressmen who voted for trade promotion authority for President Bush in 2002.

    The Wall Street Journal also said in an editorial on November 20 that "China simply appears to be the current scapegoat of choice in Washington for any and all economic woes."

    The article, entitled "Aiming at Chinese Imports, Again", pointed out that "far more of the 2.5 million manufacturing jobs lost in this country since 2001 were lost to a slowing economy and to productivity growth than to any foreigner's nefarious ways."

 


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