The actions cite China's restriction on exports of 17 forms of rare earths, in addition to tungsten and molybdenum. They state that China administers these export restrictions through its ministries, as well as "other organizations under the State Council and various chambers of commerce and industry association." They also state that it appears that China administers the export restrictions and associated requirements and procedures "in a manner that is not uniform, impartial, reasonable, or transparent," and "through measures that are not published."
Karel De Gucht, the EU's trade commissioner, made an even more forceful statement than Obama. "China's restrictions on rare earths and other products violate international trade rules and must be removed," he said. "These measures hurt our producers and consumers in the EU and across the world, including manufacturers. Despite the clear ruling of the WTO in our first dispute on raw materials, China has made no attempt to remove the other export restrictions. This leaves us no choice but to challenge China's export regime again to ensure fair access for our businesses to these materials."
An earlier Design News article on US manufacturing implied by its title that Obama has been timid in taking action to improve US technical manufacturing jobs. I agreed with that view until I read about this WTO action. I don't entirely agree with the conclusion that we should compete with China, where so many jobs have already gone, and not litigate. The whole point of the rare earth issue is that China's stance is making it extremely difficult to compete by unfair restriction of trade. So competition alone is not enough.
Litigation presents an uneasy scenario. The purpose of global organizations such as the WTO are to hold court, in the more old-fashioned, non-judicial sense of talking things out among one's peers. The WTO's description of its settlement process includes the statement that most of its disputes have not gone further than the consultation stage, "either because a satisfactory settlement was found, or because the complainant decided for other reasons not to pursue the matter further." In other words, most of them rarely reach litigation. I hope this one doesn't. But if China refuses to cooperate on the rare earth issue, the US -- and Japan and the EU -- may have to do both: compete and litigate.
That's an interesting differentiation, Ann, chess versus poker. I don't really know enough about the inner workings to know if it's chess of poker. But I would guess it's poker simply because poker does move faster and it is less complex. It could be that industry entities are playing poker while the governments are playing chess.
Rob, thanks for that info on who's manufacturing what where. The manufacturing relationships are certainly complex. Meanwhile, while some commenters have described our overall relationship with China as a chess game--long, drawn-out, complex and slow--this trade restriction section of it looks more like poker to me, as do all of the separate, individual disputes we've had with them. Poker is slower than a lot of other card games, but faster than chess: both depend on strategy and bluff, to somewhat different degrees.
I think the economic and sociological trends don't support the assumption that countries like Europe and the US with aging populations will somehow retain economic or cultural dominance because of "inventiveness," and I can't see how the rising Chinese tide will also float our boats because the so-called "free market" somehow dictates this. Historically speaking, these assumptions have been shown to be incorrect. The free market does not exist in the abstract; it's made up of individuals and cultures. Resources are limited, especially with the current global population burden: if one group takes them they are not available to another group.
China had been pretty determined to fulfill as many of its product needs as possible from within its own companies. U.S. companies have been teaming up with Chinese companies to get some of the action. So rather than sending finished goods to China, U.S. companies are manufacturing goods inside China for sale to the domestic market. GM is a good example. They are the leading automaker in China for seven years running. I'm not sure how it works, but I would guess they have a Chinese parter for the manufacturing.
I understand a Chevy in China goes for about $2,000.
Rob, thanks, I'd forgotten that term "sleeping giant" but I remember hearing it too for about that long. And that's a good point, that the middle class consumer appetite is being filled apparently by products from either China itself or other countries.
Good point, Ann. I've been hearing U.S. brand owners talking about the "sleeping giant" for 30 years. The idea is that China's huge population at some point will become a gigantic consumer market has been watched for many years. China's consumers do indeed like U.S. products. Yet so far, much of that appitite is being filled by counterfeit products. So China's desire for U.S. products has so far been somewhat of a disappointment.
There's a difference between US concerns about Japan and China. The US feared Japan because we suddenly had a (somehow unforeseen) competitor in electronics, and a very good one. The facts are that US "manufacturers" have not only offshored jobs to Asia but for well over a decade have also been courting China in hopes of selling their products and/or materials/components there because its middle class is getting bigger and about to get huge, way way bigger than Japan's, and because its appetite for everything is expanding.
I think one of the issues here is the fact that cultures do tend to look at contracts or agreements differently. Through different moral glasses. And therefore if we are not aware of how they may look at contracts and or agreements and such we may not be talking the same language.
I am with you. I hate to see government regulation in any form. Much less trying to regulate a foreign company. However, I do also agree in some cases an individual or country may not necessarily do what is best for the entire population but focus on what is best for themselves.
That's good thinking, Ervin. It may take a few decades to play out, but your conclusion is quite sound. We really have nothing to fear over a growing Chinese middle class. I still remember the unfounded fear over the rising economy of Japan in the 1980s. That was needless fear.
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