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Obama’s dire tire decision raises China’s ire

Editorial Desk (The China Post)
BARACK Obama's decision to slap punitive tariffs on Chinese tires for automobiles and light trucks is certain to draw China's ire. It was an ill-advised move at a wrong time, and it could backfire against him if he fails to do some damage control. Late in the evening of September 11, the White House issued a brief, low-key announcement on the president's decision to impose a 35% tariff on tires imported from China, by invoking a rarely-used section of a trade law which allows US industries and labour unions to seek protection from "surges" of Chinese imports that would "disrupt" US businesses.
Beijing's response was unusually swift and strong. "China is firmly opposed to this measure of commercial protectionism by US," the Ministry of Commerce said on September 13. "China reserves the right to take responsive actions to firmly protect the interests of Chinese companies." Although the ministry was vague about the "responsive actions," subsequent news reports said US chicken and auto parts sold to China could be targeted.
Obama's decision showed that Sino-US relations are indeed "complex," as once
aptly described by former secretary of state Condi Rice. Obama is anything but antiChina, who will meet Chinese President Hu Jintao in New York Tuesday, and again at the G20 summit in Pittsburgh, where leaders of the world's largest industrialised and emerging economies will gather to discuss ways of tackling the global economic downturn. US president is also slated to pay a state visit to China in November to cement US ties with China.
But Obama often has to make difficult decisions and this one was especially hard as union leaders and protectionists in Congress were pressuring him to "stand up" to "enforce our trade law." The AFL-CIO supported him during the campaign, and Obama needs their support in his fight for health care reform. Unlike president Bush who vetoed four such petitions that reached his desk, Obama faces pressures that his predecessor could afford to brush off.
Even so, his first major decision on foreign trade was a mistake. It is protectionist, blatant and unmistakable. It is against his own principles and promise that he had pledged unequivocally at previous G20 powwows and other occasions that protectionism must be resisted and defeated for the sake of free and liberal trade. Now.
however, these high-sounding words suddenly ring hollow.
When Bush nixed such petitions endorsed by the International Trade Commission, he cited America's national interest. Obama should also have such courage in leadership, for many reasons. First, imported Chinese tires are mostly low-end products for millions of ordinary consumers who benefit from the cheaper goods.
Second, higher tariffs for tires would not be of much help for American jobs or economy.
On the other hand, die move could open a Pandora's box for other sectors of the manufacturing industry to follow suit. They are indeed impacted by "surges" of low-cost Chinese imports. If Obama does not handle the issue wisely, it could lead to a trade war that nobody wants. Understandably, Obama's move was aimed at assuaging his political supporters. But the price was too high. His leadership and credibility' suffered a severe drubbing.
It may be argued that enforcing America's trade law should not be faulted. But there are other considerations of greater importance -- national economic interest and national political interest. America's economic recovery from the global recession needs China’s help in buying more US Treasury bills and debt. A large sliver of China's trade surplus with US, which totalled US$103 billion in the first half of this year, is invested in dollar-denominated US debt and assets.
Besides. Obama's move also carries
adverse political consequences. China's billion-strong netizens are angry and demanding their government to retaliate. Nationalistic feelings could be dangerous and damaging if left unchecked. In slapping the punitive tax, there should be proof of dumping or flagrant unfair trading practices as stipulated in the rules of the World Trade Organization. But the trade law invoked by Obama does not burden US with such proof. No wonder it has incurred the wrath of China.
In the past decade or so, Sino-US relations have been growing stronger and more interdependent, despite some occasional spats. When Obama took office in January, he upgraded the regular, ministerial-level strategic economic dialogue with China to an even higher echelon.
Obama knows that America needs an ally to tackle a host of thorny global issues -- war on terror, climate change, nuclear non-proliferation in Iran and North Korea, the list goes on and on.
China, on its pan, is the world's third largest economy and the largest exporter. Its near double-digit growth in the past three decades was largely fuelled by exports to the US. While China needs the US, it is growing more assertive. It is hard for China to take the slap without a whimper. Obama will have a lot of work to do to smooth China's raised hackles.
©The China Post. All rights reserved Reprinted by arra noement with Asia News Network