China's shipping containers lying on the dock after being imported to the USA in Los Angeles, California, 7. October 2010.
Credit: Reuters/Lucy NicholsonWASHINGTON, DC | Tue 26 APR 2011 3: 29 pm EDT
WASHINGTON (Reuters)-the persistently high unemployment and weak economic recovery to persuade us lawmakers slap protectionist customs duties on imports from China and around the world, the Economist said Tuesday.
"Protection is not far from the ideal policy and actually carries a serious risk, but under the current circumstances, it may offer to America, the only way out of its problems," said Paul Ashworth, Economist at capital economics for US in Toronto, in analytical notes.
To a large extent after the exhaustion of fiscal and monetary instruments to strengthen economic growth in the US Congress and President Barack Obama could realistically look at trade measures aimed at denying the Chinese currency derived commercial benefit, Ashworth said.
Possible Republican presidential candidate Donald Trump has already called for the United States slapped tariff of 25 percent on Chinese goods, a step which would violate us commitments to the World Trade Organization.
Senate majority leader Harry Reid and other lawmakers just returned from Beijing, said Tuesday that exert pressure on China to its currency to rise more quickly in the value of trade between the two countries to bring into balance.
"China's currency policy has resulted in unbalanced exchange rate, that maintains the cost of Chinese products artificially low and the cost of the US exports to China unjustly high and makes it difficult so us firms to compete with China in the global marketplace", also said in a statement that Beijing has confirmed plans to continue to be "managed" its currency appreciation, legislators.
Ashworth noted that even with the current weakness of the US recovery, the US trade deficit has once again expanded to more than 3 percent of gross domestic product and could again reach the top of the previous 6 percent of GDP.
This could lead policymakers to consider Tariffs as a way to reduce the deficit, most likely from the legislation, which would free the way for the United States the use of countervailing duties against the Yen exchange rate in China, he said.
"Look, we could see such a law is passed some time in 2012, when (President and Congress) of the electoral campaign is in full swing," said Ashworth.
"When the limited measures to stop the rise of the low total trade deficit, or maybe even the bilateral deficit with China, we expect Congress to agree to a wider range of penalties to be imposed either in China alone, or perhaps even a wider range of low-cost Asian producers," he said.
Whereas, that would most likely run this on the rules of the WTO, the logical next step will be the American debate on whether to withdraw from that organization, he said.
The preferred solution would be for China to take steps to strengthen its domestic demand, such as its "appreciation of the currency significantly more against the dollar," he said.
"Second-best solution" for the United States to deal Chinese currency advantage fares on their goods for a facial, Ashworth said in an interview for the phone.
(Reporting Doug Palmer; Editing chizu nomiyama)
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