If the anti-subsidy duties are expanded to imports of consumer goods,
this could raise costs for retailers and ultimately for consumers - CNN
Last week's abrupt 180-degree turn in U.S.-China trade policy is stirring up
plenty of concern - and confusion - on either side of the globe.
The US Commerce Department announced on Friday that it would begin to impose
tariffs on some subsidized goods from China.
This reverses a 23-year old policy of not applying countervailing duties on
cheap goods from non-market countries like China.
Joseph Chan, a Hong Kong-based businessman, is worried.
Chan's company, Million Sources Development, exports "coated" or "glossy"
paper that's used in inkjet printers and posters, to the United States and to
other countries in Asia and Europe.
Commerce Department said the first duties will be applied to imported "coated
free" paper, the type used in catalogs, magazines, ad circulars and annual
reports, Chan fears those tariffs could expand to his products as well and hurt
his sales, which he says are "somewhere in the low millions of dollars."
Election is coming up in USofA and China should
prepare for worse to come. The EU and USofA have been sparring over
subsidies in the steel and aerospace industries and will continue to do
so, China should expect no less.--Cestmoi 2007-04-04
>>Click to post your
Moreover, he's confused about whether the U.S. will also tax his other paper
products that weren't even initially manufactured in China.
"We import paper in jumbo rolls from Japan and Korea and then cut [it] in
China to market-needed sizes and then export them. Will this again be covered
under the tax?" he wondered.
China's Ministry of Commerce, through a statement on its Web site on Monday,
said it was "strongly dissatisfied" with Friday's announcement and said it
"strongly [required] the U.S. to reconsider the decision.
Meanwhile, Erik Autor with the National Retail Federation (NRF), the trade
group that represents the nearly $5 trillion U.S. retail industry, is equally
Autor, who's an international trade counsel with the NRF, feels that the Bush
administration made its decision "willy nilly," giving no opportunity for public
"And we complain about China not being transparent. I understand that the
administration is under a lot of political pressure from Congress about the
trade deficit with China, but this isn't appropriate," Autor said.
Indeed, U.S. manufacturers have long been lobbying Congress to address the
record trade deficit with China. They want lawmakers to impose tougher
However, Autor's concerns are from a slightly different perspective.
Industry watchers say retailers have never been a big proponent of
countervailing duties. And for good reason. The retail industry imports most of
what it sells in stores.
"Almost every toy sold in the United States is imported from China. 70
percent of shoes imported are from China. We import 70 to 75 percent of
clothing, and 20 percent of that is from China," he said. "With consumer
electronics, housewares, furniture, China is either the principle supplier to
American retailers or one of the top suppliers."
This makes merchants and consumers especially vulnerable to the knock-on
effect of trade tariffs against America's second-largest trading partner.
Autor said the United States already imposes duties against the dumping of
cheap Chinese goods. "Dumping" refers to the practice of selling goods abroad
below the cost of production or below the price of the product in the domestic
Autor argues that if the administration decides to extend anti-subsidy
tariffs to consumer goods - on top of anti-dumping duties - it would amount to
giving U.S. manufacturers two bites at the apple.
"For the same product that they're petitioning for fair trade measures, they
get two remedies," he said, noting that this would also put the United States on
thin ice under current World Trade Organization rules.
Such a move would hurt both consumers and sellers. He said the best example
is the anti-dumping case brought forward by the domestic wooden bedroom
In 2004, American furniture makers had petitioned the Commerce Department
asking for tariffs on imports of bedroom furniture from China. They alleged that
Chinese bedroom furniture was being sold in the U.S. at unfairly low prices,
killing their business and forcing them to eliminate domestic jobs.
Autor said the furniture makers' coalition asked for tariffs as high as 400
percent to be levied on furniture imports from China. This would have added
thousands of dollars to the sticker price of beds and dressers and other items.
Retailers feared that such a move would have significantly eroded furniture
demand among American shoppers.
"The petitioners won the case. But fortunately for retailers, the government
agreed to a much lower penalty rate of a little as 6 percent," he said.
"For retailers placing an order in China, they don't know if an anti-dumping
case could be filed at any time on that product by a domestic manufacturer,"
Autor said. "And if duties are then applied on those imports, retailers not only
have to pay the duties on arriving cargo but they also could be asked to
retroactively pay duties on those products that were already sold in the U.S."
This impacts retailers' bottom line. Eventually, store chains could decide to
pass on the extra costs to consumers in the form of higher prices, he said.
To that end, Wal-Mart, the world's largest retailer, which imports more than
$20 billion of goods from China, is urging a "balanced approach."
"We urge a balanced approach to encouraging healthy two-way trade between the
U.S. and China," Wal-Mart spokeswoman Amy Wyatt wrote in a statement e-mailed to
"We understand the importance of U.S. trade laws as well as the need to open
the Chinese market to the export of more U.S. products. The use of
countervailing duties is part of U.S. trade remedies with most of our trading
partners and the application to China has been expected for some time," she
However, Wyatt added that because Wal-Mart sources goods from more than 70
countries or regions, the company does not currently anticipate a material
impact on its business from the latest change in the U.S.-China trade policy.
Said Autor: 'At a time when we're trying to get China to adhere to its WTO
obligations and open up its market to more U.S. goods, we're not setting a good
tone for success."
(Courtesy of CNNMoney)