An unhealthy dose of festive protectionism
By Timothy Cox
Wednesday, January 6, 2010
While most of us were enjoying our Christmas turkey, Obama, Hu and the EU bureaucrats were busy at work implementing a bit of festive protectionism. They all imposed new- or extended old- tariffs on imported goods over the holiday period.
Brussels will not have received many Christmas cards from Beijing or Hanoi following the extension of the shoe tax on Dec 22nd, which will condemn Vietnamese and Chinese manufacturers to another 15 months of high import duties.
China responded the next day by imposing a tariff of up to 24.6 per cent on carbon-steel fastener imports from the EU. The EU imposed five year anti-dumping duties on metal fasteners from China earlier this year. Beijing stated that the timing of this response was “coincidental” although as Yu Liangui, vice-director of the Shanghai-based Mysteel Research Institute notes, “The measure is merely symbolic. It’s a sort of warning.”
A warning obviously not heeded by Washington who, on Dec 24th, proudly announced their latest trade penalty- anti-dumping duties on steel grate imports. The duties, up to 145 per cent, will affect around $91 million worth of steel exports from China. The anti-dumping investigation was the result of petitioning by US companies Alabama Metal Industries and Fisher & Ludlow.
It is time for tit-for-tat reciprocal trade restrictions to stop. Higher prices, lower demand and therefore less trading will not benefit any economy, despite the claims of industry lobbyists and unionists. The U.S., China and the EU need put the dampers on escalating tensions over trade and give their businesses and consumers what they really would’ve liked for Christmas- freedom to trade and prosper.