Super Turkey Punchers: China, US Trade Blows

♠ Posted by Emmanuel in ,, at 11/06/2009 04:10:00 PM

Well, well, well, this latest joint Sino-American hypocrisy over trade is interesting. Those of you who've played Doom 3 know what I'm talking about in the title. Prior to blasting aliens to kingdom come, the protagonist in Doom 3 has the opportunity to play an in-game arcade feature called Super Turbo Turkey Puncher 3. As you can gather from the video above, it is entertaining in a dumbly morbid way. The same holds true here with China and the US feigning trade amity.

Let's first set the stage for some prime time fowl play. At the end of last month, China and the US pledged that they would no longer engage in tit-for-tat combat on the trade front at the 20th China-US Joint Commission on Commerce and Trade. There was US Trade Representative Ron "Cap'n" Kirk and Commerce Secretary Gary Locke doing the diplomatic equivalent of kumbaya. Also there was Chinese Commerce Minister Chen Deming vowing that "Both sides agreed on not introducing any new trade protection measures against each other as both vowed to oppose trade and investment protectionism and observe the related consensus of the G20 summit." I, of course, found this quite amusing and thought it wouldn't be long until one side started whacking the other once again.

To no one's real surprise, the US was the first to break this lovey-dovey nonsense. On Wednesday, the USTR in tandem with Mexico and the EU delivered a long-awaited punch to the proto-Marxist-Leninist-Maoists over raw materials export limitations. The point of which is to keep China well-stocked with domestically sourced raw materials in alleged contravention of WTO rules. After not making progress in consultations with China during the preliminary 60 day period, the complainants have now requested the WTO to form a dispute settlement panel:
China imposes quotas on exports of bauxite, coke, fluorspar, silicon carbide, and zinc, as well as certain intermediate products incorporating some of these inputs. China also imposes export duties on several raw materials and imposes other export restrictions through its export procedures, including via certain charges (unrelated to any services rendered) that must be paid before certain products can be exported. In addition, China administers its export procedures unfairly in other respects, including, for example, by not publishing relevant measures in a manner that allows them to be readily available to governments and traders.

Article XI:1 of the General Agreement on Tariffs and Trade (GATT) generally prohibits restrictions on exports other than taxes, duties, and charges. GATT Article X requires China to administer its measures in a uniform, impartial, and reasonable manner, and GATT Article VIII requires that any charges in connection with export be limited to the cost of services rendered. Further, China's WTO Accession Protocol contains broad commitments not to restrict the right to export goods. Specifically, China committed as part of its WTO accession to eliminate export duties for all products other than those listed in a specific annex. China also committed to limit any export duties on the listed products to specified levels. The export duties being challenged are on products not listed in the annex or are imposed at rates that exceed the annex limits.

Requesting a panel is the next step in the WTO dispute settlement process after requesting consultations. The WTO's Dispute Settlement Body will consider the U.S. panel request at its meeting scheduled for November 19.
So, there's no tit-for-tat with this foregone US act of trade aggression, right? Lo and behold, today we have news that China is engaging in more punch-ups with the Yanks over oil well pipes that's been some time coming. From our favourite official publication, China Daily:
China's Ministry of Commerce (MOC) Friday branded the United States imposition of anti-dumping duties on Chinese oil well pipes as protectionist and vowed to take measures to protect its own domestic interests. The United States denied China's market economy status and took discriminative measures to impose anti-dumping duties, bringing serious impacts to China's steel sector exports, said MOC spokesman Yao Jian in a statement on the ministry's website.

"We hope the United States can get rid of the bias and admit China's market economy status soon to tackle the double standards thoroughly and give Chinese enterprises equal and fair treatment," Yao said.

The US Commerce Department on Thursday set preliminary anti-dumping duties on imports of Chinese-made oil well pipes. The department said it had "preliminarily determined that Chinese producers/exporters have sold OCTG (oil country tubular goods) in the United States at prices ranging from zero to 99.14 percent less than normal value." As a result, a 36.53-percent levy was imposed on OCTG from 37 Chinese companies, while some other Chinese companies received a preliminary dumping rate of 99.14 percent.
The emphasis above is mine and is quite funny given the "no more tit-for-tat" vows. With friends like these...Anyway, the we're-not-vengeful Chinese have now initiated an anti-dumping, anti-subsidy (wow, a double) investigation on US automobiles in response:
China's Ministry of Commerce (MOC) said Friday it had launched anti-dumping, anti-subsidy investigations into US-made off-road vehicles and sedans with engine displacements of 2.0 liters and above. The decision was made after the China Association of Automobile Manufacturers (CAAM) filed an application for the investigations, the MOC said in a statement posted on its website.

CAAM, representing Chinese car-makers, said US car makers had unfairly benefited from 31 government subsidy programs. The MOC decided to investigate into 24 of them. The ministry said it held consultation with its US counterpart on Tuesday and made the decision in accordance with China's anti-dumping and anti-subsidy laws. The investigations would commonly be ended before November 6, 2010, but might be extended by another year if necessary, the MOC said.

The M0C announcement came one day after the US Commerce Department set preliminary anti-dumping duties on imports of Chinese-made oil pipes, which was the biggest US trade action against China.
I have more background information from a previous post on the controversy over classifying China as a market economy or not. As for US subsidies for American automakers, the bailouts of GM and Chrysler immediately come to mind and how those may be tied to their Chinese exports. Given that China is now the world's largest car market and GM vies for top sales honours there with Volkswagen, this could have the makings of a really nice exchange of blows if the automaker is hit hard. (Then again, the WSJ notes GM makes most of its cars in the PRC.) Also don't forget that Obama is set to visit China this upcoming week.

So you see, boys and girls? No tit-for-tat here. None whatsoever. Now, if you'll excuse me, this turkey of a trade exchange has inspired me to play some Super Turbo Turkey Puncher 3 for old time's sake. As before, I suggest that these two jokers just cut the crap and started fighting already instead of giving fodder to would-be blogging comedians.