US ADMINISTRATIVE TRADE POLICIES

US trade policies with China are aimed at continuing good relations and address its economic problems whereas these policies have caused a huge trade deficit with its second largest trading partner (China) in the past twenty one years. There was no proper road map for either of these countries to make suitable changes in their economic policies.

Administrative Concerns:
US administration has failed to lay down its economic concerns and emphasize a concrete action plan to protect businesses in their country. Clinton and Bush administrations followed a cautious approach with China realising the importance of its vital trade partner in accomplishing successful economic changes.

Barack Obamas policies:

Barack Obama re-established the Strategic Economic Dialogue (SED) and resurrected the Joint committee on Commerce and Trade (JCCT) aimed at resolving a wide range of economic issues. Obamas administration is likely to make necessary amendments in trade policies with China in the best interests of the country, which can strengthen its position in 2012 elections.

US China Interdependency:
Firstly US view China as a major market for its exports and needs cheap labour for its multinational global chains. Also requires Chinas credit to brook its deficit in trade whereas China needs US for its exports and investments across various industries.

Violation of Policies by China:

Some of the Chinese policies that curb the sustainable and balanced growth of US are: Improper incorporation of Intellectual Property Right Laws Excessive undervaluation of Renminbi. Maximum subsidization offered to Green Industries Export control on rare earth minerals. Bid rigging in government procurement contracts. Barriers to investment in telecommunication and financial services. Frequent harassment of US based China companies.

Chinese trade policies are aimed at discriminating foreign firms and the exchange currencies.

Political Significance:
The support for protectionist policies is the key for Barack Obamas government to fare well in the 2012 elections as he needs the backing of anti-trade, pro-human rights advocates. The revisit of the trade policies would help in ensuring their support and the associated business communities. Thus the positive evolution of US policies will help the administration in elections.

Recommendations:
US should award the market economy status to China and involve in the negotiation of a bilateral investment treaty provided China make necessary amendments in the above mentioned policies in the best interests of two nations.

US ADMINISTRATIVE TRADE POLICIES

Impact on granting the Market economy status:
Majority of the US domestic import competing companies easily secure limits on import of competitive Chinese products to sustain in the market. Thus awarding market economy status to China will leave these companies at a big disadvantage.

Bibliography:
Washington Post, 6th March 2009. Financial Times, 13th January 2010.

References:
Centre for Educational research and Innovation (CERI). Asian Trade and Finance.

Author Contact Information:

V.Saravanan PGP 1ST Year IIM Rohtak saravanan.vasanthakumar@gmail.com