China Trade Tensions With U.S. Have Been ‘Amplified,’ Kirk Says
By Jim Efstathiou Jr.
April 3 (Bloomberg) -- China’s trade disputes with the U.S. have been “amplified” and in some cases are no worse than those with other countries, U.S. Trade Representative Ron Kirk said ahead of a visit to Washington this month by President Hu Jintao.
Kirk declined to single out China as a protectionist nation in an interview on Bloomberg Television’s “Political Capital With Al Hunt” airing this weekend. The U.S. and China, with $409 billion in annual trade, have a complex relationship that holds “great promise,” Kirk said.
“Our challenges with China I think get amplified because there’s so much attention focused on China,” Kirk said. “But we have challenges throughout Asia.”
President Barack Obama would like to complete at least one of three pending trade agreements with Korea, Colombia and Panama this year, Kirk said. While he declined to say which accord would come first, Kirk said the administration is making “good progress” on resolving labor and tax issues with Panama.
Bipartisan cooperation will be required on trade issues to keep the U.S. competitive with other countries that are lowering tariffs, Kirk said. He has met with representatives of labor unions and congressional Democrats over the past 14 months to try to defuse the emotions surrounding trade, Kirk said.
Tire Tariffs
“We’re not going to be able to move forward if we have a poisoned political environment in Washington in which every issue that comes up becomes the next health care,” Kirk said. “If we do it right, we ought to be able to thread the needle in a way that we can answers some of their criticisms honestly but still find a way to move forward.”
Obama in September placed tariffs on automobile tires from China after labor union complaints that imports were pushing U.S. factory workers out of jobs. In February China, the largest market for U.S. chicken, said it would impose anti-dumping duties on imports of American poultry products, threatening to deepen a trade rift.
China’s trade relations with the European Union have also been strained, with Beijing complaining to the World Trade Organization about the European Union’s anti-dumping measures targeting leather shoes made in China.
U.S. Treasury Secretary Timothy F. Geithner is under congressional pressure to label China a currency manipulator after China kept the value of the yuan unchanged against the dollar for almost two years. Critics say that gives Chinese exporters an unfair advantage.
Nuclear Summit
It’s in China’s interest to move toward a more flexible exchange rate and he’s confident officials will take action, Geithner said yesterday in an interview with Bloomberg Television. China needs to depend less on exports for growth, he said.
Hu’s attendance this month at a nuclear summit improves the chances China won’t be called a currency manipulator when the U.S. Treasury releases its biannual report on exchange rates, said China International Capital Corp., a Beijing-based investment bank that’s part-owned by Morgan Stanley.
In an hour-long call on April 1, Obama sought Hu’s support for Group of 20 pledges to sustain the global economic recovery and for cooperation to help stop Iran from developing nuclear weapons, the White House said in a statement.
“We need to encourage Chinese investment in the United States,” Duke Energy Corp. chief Jim Rogers said in an interview on April 1. “It’s a one-way street right now. We’ve got to reduce the rhetoric and focus on being competitive.”
Pegged Yuan
China pegged the yuan at about 8.3 per dollar from 1995 until July 2005, when the government shifted policy and allowed some fluctuation by managing its exchange rate against an undisclosed basket of currencies. After a 21 percent gain in the currency that hurt its exporters, China in July 2008 began restraining the yuan’s value.
Yuan forwards posted their biggest weekly gain in almost three months on mounting speculation China will loosen its grip on the currency after data showed an economic recovery is gathering pace. Twelve-month non-deliverable forwards advanced 0.2 percent to 6.6491 per dollar as of 5:30 p.m. yesterday in Hong Kong, reflecting bets the currency will strengthen 2.7 percent from the spot rate of 6.8256, according to Bloomberg data.
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