Steve Quayle News Alerts

December 13, 2003
By Peter S. Goodman
Washington Post Foreign Service

SHANGHAI, Dec. 12 -- China on Friday sharply criticized the Bush administration's decision to consider imposing protective tariffs on imports of Chinese bedroom furniture, assailing the investigation as a new front in an escalating trade dispute between the two countries.

"We strongly protest the U.S.'s decision to proceed with the probe," said Chong Quan, a spokesman for China's Ministry of Commerce, in a written statement, asserting that the U.S. action breaks the rules of the World Trade Organization.

China's admonition came in reaction to the U.S. Commerce Department's decision to open an investigation into the sales of about $1 billion worth of Chinese bedroom sets in the United States, following complaints from American producers that these goods are being sold at below fair market prices -- a practice known as dumping. In petitions, U.S. furniture manufacturers have asserted that they have been unfairly harmed by a surge of such goods.

The furniture spat comes amid continuing signs that trade may intensify as a political issue in the months before next year's presidential election in the United States. On Friday, the Commerce Department reported that the U.S. trade deficit climbed in October to a record high of $41.8 billion while running at an annual rate of more than $490 billion -- far larger than last year's record trade deficit of $418 billion.

At the center of the tension sits China, whose trade surplus with the United States is expected to swell beyond $120 billion for the year. The Bush administration has put much of the blame for the loss of some 2.8 million American manufacturing jobs on China.

Beijing argues that it is being unfairly accused, noting that its trade with the rest of the world is largely balanced. It has in recent weeks announced a series of high-profile purchases of American goods, including airplanes and agricultural products, in a bid to trim its trade surplus with the United States.

The Commerce Department's decision to investigate bedroom-set imports came only hours after Chinese Premier Wen Jiabao wrapped up his first visit to the United States. Wen has sought to undercut notions that China's economic ascendance constitutes a threat to the United States, portraying it instead as an enormous opportunity -- the addition of a rapidly developing country of 1.3 billion people to the global marketplace. China and the United States formally agreed to establish a high-level team to try to iron out trade conflicts.

The trade battle took shape earlier this year as the Bush administration demanded that China allow its now-fixed currency, the yuan, to trade freely, asserting that cheap Chinese money gives its exports an unfair price advantage. That talk has mostly cooled after Beijing's rebuff of a series of high-level U.S. envoys. Since then, dumping complaints have emerged as the primary battleground.

Last month, the Commerce Department imposed protective tariffs against about $450 million of Chinese textiles and garments, then announced provisional protections against Chinese-made televisions. The Chinese Ministry of Commerce spokesman called the bedroom furniture probe "the biggest anti-dumping case China has faced so far."

Bush administration officials have argued that China subsidizes the production of low-cost products to keep its workers employed, resulting in a glut of low-priced Chinese goods reaching American shelves. But some trade experts argue that the process by which dumping claims are investigated is unfairly tilted toward domestic producers. In this case, the Chinese manufacturers must now persuade the Commerce Department that they are not dumping or face protective measures. Critics say Commerce is hardly an impartial judge, asserting that the process is guided less by the merits than by political expedience.

"The global anti-dumping regime is a concoction of protectionists, and generally charges of dumping are bogus," said Scott Kennedy, a professor of political science at Indiana University in Bloomington who specializes in trade politics. He said the basic problem is the overly broad definition of dumping -- selling overseas at a lower price than in one's home market, something he said a company could do for many reasons, such as seeking to gain market share.

Commerce Secretary Donald L. Evans defended the dumping regime during an interview this fall.

"It is a very effective law for us to have as we try to have a level playing field for the benefit of Americans," Evans said.

http://www.washingtonpost.com/wp-dyn/articles/A61044-2003Dec12.html