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China's Free Tarde

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China and Free Trade

In the International Business class, free trade has been the cornerstone for economic prosperity. But sometimes free trade can flood the market with cheaper products, causing financial problems for companies in this country. Often, the U.S. government will set up a tariff to help the American companies. But is this the best solution? This is the topic of the article, Bush's China-Trade Dilemma by Neil King, Jr. published November 14, 2002 in "The Wall Street Journal."

Since China joined the World Trade Organization last year, it has become the third largest supplier of goods and services imported to the United States. Many U.S. companies are complaining that China is selling the items below cost and want Congress to impose duties. They accuse China of breaking the free-trade agreement that it made when it joined the WTO. Trade expert, Gary Hufbauer, says, "It is just a matter of time before we have a repeat of the Japan trade battles, but this time with China."

But many in Washington believe that if the U.S. files a grievance against China with the WTO, other countries will follow and the WTO system will become overwhelmed with complaints against China. As one U.S. official stated, "I'm not sure anyone wants to be the first in line to whack China at the WTO." Overall, China has a good free trade record and is really making an effort to join in the world economy. But China's success has hurt some U.S. companies and talk of protectionism has started in the U.S. So what does Bush do? The administration praises free trade, but is seriously considering implementing tariffs for protection on certain items. Is this a contradiction?

There is another complication that needs to be addressed. Many of the companies that manufacture in China are really American owned, such as Motorola Inc. How will this affect what does the Bush administration



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