Obama Picks Trade War With China

This is amazing! Trade wars and retaliations were one of the factors that worsened the Great Depression. Now, Obama is making the same mistake again!

from Bloomberg:

The Obama administration plans to step up enforcement of trade laws against nations, such as China and Vietnam, that help subsidize companies exporting cheap goods to the U.S.
The U.S. Commerce Department developed 14 proposals to crack down on illegal import practices and require parties to pay the full amount of any duties, according to a statement today. The process to adopt the plan, which the department said is especially aimed at countries where the government has control over markets, will begin later this year.
"Generally, this is targeted at China, and China will see it as such," said David Spooner, a former Bush administration official now a trade lawyer with Squire Sanders in Washington who represented Chinese companies in a tariffs disputes. "The aim is to raise the price of goods from China."
The plan is part of the administration's effort to double exports in the next five years to spur job growth, a goal President Barack Obama set in his State of the Union speech in January. Doubling exports would help support 2 million new jobs, the administration said.
"This is a very important move on the part of the administration," said Dan DiMicco, chief executive officer of Nucor Corp., the largest U.S. steelmaker. He said the U.S. also needs to resolve issues tied to the yuan because China's currency is undervalued by as much as 60 percent.
"Before American manufacturers get out of bed in the morning, they're already at a 40 to 60 percent disadvantage," DiMicco said in a telephone interview. "As long as we continue to let them get away with it, they'll keep doing it."
China Meets Obligations
DiMicco, a member of an administration advisory panel on manufacturing issues, said the today's proposals are consistent with recommendations from the group.
"China is now a market economy country and the Chinese enterprises conduct business with foreign enterprises in accordance with its obligation upon joining" the World Trade Organization, said Wang Baodong, a spokesman for the Chinese Embassy in Washington. "Foreign countries should not in any way set up obstacles to normal economic cooperation and trade between China and foreign enterprises."
The proposals would end the practice of letting individual foreign companies seek an exemption from extra duties if they show they weren't dumping or receiving subsidies during a certain period. Under the plan, companies would have to wait for the normal country-wide expiration of the duties.
Cash Vs. Bond
Also, importers would have pay a cash deposit to continue bringing products into the U.S. during an investigation, instead of being able to post a bond for the estimated duties owed. The department said that, in the past, that estimate was too low.
The measures will give U.S. companies "a more certain sense that the injury they believe they've had because of unfair trade practices can be addressed," said Ronald Lorentzen, deputy assistant secretary for import administration, which enforces laws tied to unfair trade acts.
Some changes will align the U.S. with practices followed by other countries and deal with issues the department has seen in past cases, he said. Comment from the public will be sought before the changes take effect.
Another proposal would alter how the department determines a country's wage rate, which is used to calculate whether products are being sold in the U.S. at artificially low prices.
ITA Effectiveness
The proposals are designed to improve the effectiveness of the International Trade Administration, which investigates whether foreign companies exporting products to the U.S. are receiving unfair subsidies from their home countries or flooding U.S. markets to undercut American businesses.
The Commerce Department estimated that American exports accounted for 7 percent of employment and one in three manufacturing jobs in 2008. Exports increased 17 percent in the first four months of 2010 from the same year-ago period, the department said.
Last year, the ITA's Import Administration began 34 anti- dumping and countervailing duty investigations, compared with 19 in 2008, the department said.
Senator Charles Schumer, a New York Democrat, and 14 colleagues in February said Chinese exporters should face stiffer U.S. tariffs to compensate for the advantage they get from the undervalued yuan, an issue that's part of a dispute over glossy paper imports from China. Spooner said that the department probably will avoid the currency issue.
Currency Dispute
"Commerce will almost surely refuse to investigate Chinese currency as a subsidy and this announcement today is meant to take the political sting out of that," Spooner said.
DiMicco said the administration has gone further than its two predecessors in addressing some of the issues with China and needs to go further.
"They recognize there's a massive manipulation going on, but they're doing the same things the Bush and Clinton administrations did -- try to negotiate," DiMicco said. "Billions and trillions of dollars worth of damage has been done. They need to enforce the rules and make sure people play by the rules or we will not be able to turn this around."