U.S. Relies on Ill-Equipped WTO

U.S. trade officials are close bringing a case to the WTO against Chinese steelmaking and related industries, according to Financial Times.

The specific case deals with the issue of “dumping”, in which one nation (China) undervalues a domestic industry in order to make it more enticing for export to foreign buyers. In this case, the U.S. believes that China has artificially altered the cost and pricing of its domestic steel industries in order to flood the world market with Chinese steel and thereby force out competition.

Unfortunately, American trade representatives may simply be using this opportunity as an attempt to show a tough stance on trade prior to the Presidential election. The Office of the United States Trade Representative is a cabinet level office. With a Republican incumbent, George W. Bush, this move may be used by current Republican candidate John McCain to bolster his party’s position on trade and the economy as more of the population turns against the WTO and “free-trade”.

The United States has already seen much of its steel industry come under foreign ownership and can ill-afford to see it phased out all-together by China’s capacity for production and price alteration. However, the dispute process in the WTO takes months or even years to finally reach a conclusion, and a U.S. victory is hardly guaranteed.

This episode carries the possibility of helping to reestablish the U.S. steel industry. But, it may be no more than another example of why the United States should renegotiate its terms with the WTO or chose to remove itself from an organization which does not represent our nation’s best interests.

Source Financial Times:

US trade officials are close to filing a case against China at the World Trade Organisation challenging export restrictions on raw materials used in steel-making and other industries. … The final decision has yet to be made but a move by the US before the presidential election in early November would support Republican claims that the Bush administration has not been shy about bringing WTO cases against China that it believes it can win. Amid increasing scepticism about the benefits of trade in the US, Democrats in Congress have attacked the administration for being too lax on trade enforcement. The US is expected to argue that Chinese export quotas and taxes on raw materials such as metallurgical coke, molybdenum, silicon carbide and fluorspar used in steel production artificially deflate domestic prices and inflate global prices, putting US producers at a disadvantage in violation of WTO rules.

Click Here For Solutions To America's Economic Problems: