Trump Administration Lays Groundwork to Keep Big Tariffs on Chinese Goods -- Update
30 March 2017 - 3:15PM
Dow Jones News
By William Mauldin
WASHINGTON -- The Trump administration appears poised to cement
China's unfavorable status in trade cases, making Chinese goods
eligible for higher U.S. tariffs well into the future.
U.S. officials are preparing a review of China's "market-economy
status" under the World Trade Organization, according to official
documents on the Commerce Department website.
The review is expected to be announced as early as this week,
just days before a high-stakes meeting between President Xi Jinping
and President Donald Trump.
"China and others need to realize that the games are over --
continuing their unfair trade practices and operation as a
nonmarket economy will have serious consequences," the Commerce
Department said in a statement.
U.S. labor unions on Wednesday applauded the review and urged
the Trump administration to avoid granting market-economy status.
"The preferential status China is seeking would allow them to dump
more unfairly priced products into the market, while claiming to
abide to market economics," said Leo Gerard, president of the
United Steelworkers union, in a statement.
Beijing has said members of the WTO were required to start
treating it as a market economy in December 2016, on the 15th
anniversary of its membership in the Geneva-based body that
oversees global trade.
However, the Obama administration declined to take steps to
grant China that status, continuing to treat one of its largest
trade partners as a nonmarket economy. Mr. Trump said in December
that China is "not a market economy."
Adopting full market-economy status would involve changing the
way the U.S. conducts trade cases and likely make it harder for
American firms to win big punitive tariffs against Chinese
companies blamed for dumping products on the U.S. market or selling
goods that benefit from improper subsidies.
The U.S. has dozens of punitive tariffs on steel products and
other allegedly dumped products.
The Trump administration is working out how to deal with trade
cases against Chinese industries and whether to continue to
calculate the tariffs treating China as a nonmarket economy.
The Commerce Department linked the notice of its review to a new
case in which it is investigating possible aluminum-foil dumping by
China.
Wang Hejun, head of the trade remedy and investigation bureau of
China's commerce ministry, urged the U.S. on Wednesday to abide by
WTO rules in its aluminum-foil investigation. Chinese companies
shouldn't be blamed for reduced U.S. output since American
producers have been walking away from low-value aluminum-foil
production for 20 years, he said, according to the official Xinhua
News Agency. Improper trade remedies would hurt both sides, he
said.
At a business conference last week in the tropical Chinese
island of Hainan, Vice Premier Zhang Gaoli said, without
specifically mentioning market-economy status, that China remains
committed to globalization and free trade under the WTO, echoing
President Xi's speech at the World Economic Forum in January. China
is working to improve conditions for foreign investors in the
service, manufacturing and mining industries and to re-energize
trade as an engine of growth, Mr. Zhang said.
China has benefited enormously in recent decades from open
global trading systems, but economists and political scientists say
Beijing needs to further open its markets, reduce government's
heavy hand in the economy and allow unprofitable companies to fail
if it wants to live up to its verbal embrace of free trade and
globalization.
Mr. Trump has repeatedly accused Beijing of cheating at trade
and threatened during the 2016 campaign to impose across-the-board
tariffs on Chinese imports. Trade experts say the Trump
administration is almost certain to step up the types and number of
trade cases against China, even at the risk of a backlash at the
WTO or from U.S. importers.
Beijing is likely to fight the new administration's trade cases
at the WTO and has also said it would challenge the way the U.S.
calculates its tariffs in line with its status at the WTO.
Trade lawyers expect a protracted battle and a final ruling in
Geneva several years in the future.
For nonmarket economies, trading partners can use other
countries' price data in calculating China's costs, a method that
has been employed when assessing punitive tariffs against
China.
--Mark Magnier contributed to this article.
Write to William Mauldin at william.mauldin@wsj.com
(END) Dow Jones Newswires
March 30, 2017 00:00 ET (04:00 GMT)
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