'Honey Laundering', Schumer, and China Bashing

♠ Posted by Emmanuel in ,, at 6/14/2010 12:02:00 AM
Honey honey, how you thrill me, ah-hah, honey honey
Honey honey, nearly kill me, ah-hah, honey honey
I'd heard about you before...I wanted to know some more
And now I know what they mean, you're a love machine
Oh, you make me dizzy!

Though I highly suspect the venerable Senator Charles Schumer (D-NY) would like nothing better than to slap tariffs on Swedish pop like he does for anything remotely "harming" US industry--perhaps New York wants to contribute more to the endless parade of American entertainment bimbettes --his quixotic quest to bash others is reaching a fever pitch. Let me share with you some not-so-fine words that have since been bandied about "a country without a soul" (US senator on China), "baby-kissing politicians" (Chinese media on US politicians) and yes, the eponymous "honey laundering" episode -

1. In a press release a few days back, he wanted to introduce legislation disclosing the nationality of those answering enquiries in call centres for technical support as well as fining companies transferring call centre jobs abroad. In a way, Schumer is just as non-colour-blind as certain Arizonans when the measure of customer satisfaction is not where call centre handlers are from but if they can solve your technical issues. What a radical marketing concept.

2. However, Chuck still has bigger fish to fry even if he hasn't delivered on the past on his China-bashing. Which, he began to tackle in due course to no one's surprise. A few days after the call centre brouhaha, he called on the Department of Commerce to release the results of a pending countervailing duty investigation on Chinese paper faster.

3. Apparently unsatisfied with these efforts just yet, he renewed calls from his congressional colleagues from both houses including the usual suspects Graham, Brown, Stabenow, and Levin for action on China that he believes the executive branch is unwilling to pursue at the moment. There are two pieces of legislation on tap. First, Schumer and Graham are modifying their approach by introducing China-bashing legislation via a rider to another bill. Sneaky he is, Chuck. Second, Senators Graham and Stabenow plan to introduce a new bill challenging China's government buying practices by forcing it to adopt the WTO's Government Procurement Agreement (GPA). If you will remember, many countries have been critical of the PRC's drive to promote local technology firms by inserting preferences for them in public procurement [1, 2]. In essence, the proposed bill will ban US procurement from Chinese suppliers if the PRC doesn't adopt the GPA (which, on the face of it, represents a violation of America's WTO commitments) -
U.S. congressional anger over China's currency and trade practices boiled over on Wednesday as senators vowed to pass legislation soon and lashed out at President Barack Obama's administration for failing to get tough with Beijing.

"Years of meetings and discussions with Chinese officials in an effort to persuade China to float its currency have repeatedly failed to produce lasting and meaningful results," Senator Charles Schumer told the U.S.-China Economic and Security Review Commission, a watchdog group appointed by Congress...No question, this is what is called a 'put up or shut up' moment for lawmakers," the New York Democrat said.

Schumer told the commission that he and other colleagues would push for a vote "in the next two weeks" on legislation that would allow the Commerce Department to use anti-dumping and countervailing duty laws against China or any other country with a fundamentally misaligned exchange rate. He blamed China's undervalued currency for millions of lost U.S. manufacturing jobs and thousands of closed facilities...

Meanwhile, the House of Representatives Ways and Means Committee announced plans on Wednesday for a hearing on June 16 to examine China's trade and industrial policies. "The United States cannot take a passive or 'hands off' approach to trade when China's government is actively seeking to misshape the terms of trade to gain a competitive advantage over U.S. businesses and workers," Committee Chairman Sander Levin said in a statement.

Senator Lindsey Graham, a South Carolina Republican, called China "a country without a soul in terms of what's right and what's wrong" [oh Lindsey, what a moralist] and predicted there could more than 80 votes in the 100-member U.S. Senate for the legislation he has co-sponsored with Schumer and others. We have an unhealthy relationship with China and the only way we can get back to an even keel is for the Congress to insist to play by the rules," Graham told reporters after he testified before the watchdog commission. In addition to manipulating its currency, China also keeps its market closed to many U.S. goods and allows widespread intellectual property theft, he said. "The Obama administration hasn't been forceful enough," but neither was former President George W. Bush, Graham said.

Schumer and Graham are expected to offer their bill as an amendment to a broader piece of legislation, rather than try to pass it on its own. For the bill to be enacted, it would also have to be approved by the House of Representatives and signed into law by Obama. "There's a lot of pressure from the Obama administration to stop this legislation," Graham said.

The panel also heard from Senator Debbie Stabenow, a Michigan Democrat, who said she and Graham would introduce a separate bill next week barring the U.S. government from buying Chinese products until Beijing has joined the World Trade Organization agreement on government procurement.

Senator Sherrod Brown, an Ohio Democrat, told the panel he worried China was using its deep pockets to grab the world lead on clean energy manufacturing "while elbowing competition out of the way by discrimination against U.S. companies...He urged the U.S. Trade Representative's office to launch a formal "Section 301" investigation to determine whether China is violating its WTO obligations, "Just the launch of a '301' case by this administration will show China that we are serious about competing in this emerging market," Brown said
Apparently, the Chinese have been taken in by this rhetoric to a perhaps unwarranted extent. Here is a petulant editorial from our favourite official news agency, Xinhua. The points in this excerpt are generally sensible:
Some members of the U.S. congress are playing a dangerous game by manipulating the Chinese yuan debate for domestic political gains. These congressmen, prompted by a need to appease American workers frustrated by the loss of millions of jobs in the global financial crisis, and to woo constituencies in elections to be held later this year, are resorting to their old trick of blaming everything on China. They claim China's foreign exchange policy is costing America jobs and threaten to impose tough trade sanctions against Chinese imports. But they choose to ignore the fact that an appreciating yuan cannot rebalance Sino-U.S. trade or help create jobs for American workers. Both trade imbalance and high unemployment are deep-rooted economic problems that can only be addressed when the United States implements some painful yet necessary structural reforms.

These congressmen claim they are the white knights defending the interest of the American people, but in fact, they are nothing more than a bunch of baby-kissing politicians trying to swing voters by manipulating the yuan debate. They only served to divert the public attention from the much more serious domestic economic problems, which are caused in part by their incompetence.
4. Yes well, to heck with those baby-kissers (or something like that). But, to round off his China-bashing labours, Schumer also has another cause identified in the post title, "honey laundering" by the PRC:
“Honey laundering” by China is largely responsible for a decline in U.S. honey production, Sen. Charles Schumer charged this week as he called on U.S. agencies to enforce existing import duties on Chinese honey and purity standards. New York honey producers rank 12th in the nation and are experiencing their share of the decline as honey of Chinese origin undercuts U.S. sales despite a 10-year-old import duty enacted in reaction to predatory trade practices, Sen. Schumer told reporters during a telephone press conference Wednesday.

“New York honey producers are feeling the sting,” Sen. Schumer said. After the U.S. tariff was imposed on Chinese honey, the Chinese circumvented the tariff by exporting it to other countries before shipping it to this country. “China is bucking the (tariff) law,” he said, adding the U.S. was losing $100 million to $200 million a year in tariffs over the honey imports. China has also mislabeled its honey as a malt sweetener or syrup to avoid the tariff, the senator said. “It’s pure criminal behavior. China is acting almost like the mob,” he said.

Besides avoiding the tariff duties, Chinese honey has been known to be contaminated with antibiotics. Sen. Schumer said the U.S. Customs and the U.S. Food and Drug Administration could crack down on the Chinese honey trade if a pure-honey standard were adopted by the FDA. “It would give federal agents much greater authority to crack down on adulteration, misbranding and fraudulent mislabeling,” he said.
There is really no definitive answer to what the effect of America slapping tariffs on China will be, or of China firing warning shots first by selling a couple of billion worth of "safe" Treasuries. Both sides like to talk tough, but in the end you have to put your money where your mouth is at if you want to be taken seriously. I've said it before and I'll say it again: Why don't you just cut the crap and start fighting already?