U.S. Hits China With 100% Tariffs Piracy Provokes Largest Sanctions In U.S. History
The Clinton administration on Saturday imposed punitive tariffs on more than $1 billion of Chinese goods, the largest trade sanctions in U.S. history, and warned of further action if the communist government continued to refuse to crack down on rampant piracy of U.S. software, movies and music.
The decision to impose 100 percent punitive tariffs on goods ranging from silk blouses to cellular telephones was met almost immediately by an angry Chinese announcement of tariffs against American-made goods.
The trade confrontation comes at a particularly delicate moment in Chinese-American relations, with disagreements brewing on human rights and arms control as well, and with China’s paramount leader, Deng Xiaoping, reported to be seriously ill.
But after several meetings at the White House in recent days on the United States’ deteriorating relations with Beijing, administration officials decided that despite the transition of power presumed to be under way, there was no reason to delay the sanctions. Through the first 11 months of 1994, the United States imported $36 billion of products from China while exporting $8.5 billion of goods there.
Each country said its penalties would take effect on Feb. 26. The delay, a common practice in cases of trade sanctions, is intended to assure that goods shipped before the retaliatory tariffs were announced would not be affected. The delay also provides a chance for further negotiations.
U.S. consumers will be among the first victims of the dispute. Under the rules published on Saturday, for example, the U.S. Customs Service would be required to put a $100 tax on every $100 Chinese-made bicycle imported to the United States.
Over the last five weeks, however, U.S. officials have been pruning the list of products selected for retaliation, honing in on goods produced in several other nations as well, so that consumers could choose, for example, a Japanese or British-made bicycle that is not subject to the tariffs.
They have also avoided products where the tariffs seemed likely to hurt U.S. business, including two of China’s biggest exports here, toys and electronic goods.
Saturday’s action was the culmina tion of a dispute between the United States and China that has bubbled along for nearly two years, a period in which the administration had set aside serious concerns about human rights in China in the hope of bolstering trade, among other things.
The current dispute has begun to eclipse Washington’s long-running trade arguments with Japan. Last year, the U.S. trade deficit with China climbed to $30 billion - roughly half the size of the deficit with Japan - and U.S. businesses say that piracy of U.S. “intellectual property,” particularly copyrighted material like movies and music, has contributed to the trade imbalance.
The United States has repeatedly demanded, for example, that China close 29 factories - many of them state-owned - that are producing 70 million compact discs and videodiscs every year, from illegal copies of Whitney Houston’s hit soundtrack from “The Bodyguard” to movies like “True Lies” and “Clear and Present Danger.”
At a press conference here on Saturday, Mickey Kantor, the U.S. trade representative, held up bootleg products purchased around Asia, including knockoffs of the latest version of the Microsoft Corp.’s personal computer operating system and canned foods bearing the label “Del Monte.” Kantor said that after 21 negotiating sessions in the last two years, China still refused to crack down on the production and distribution of such products.
“The Chinese know what they have to do,” he said. “They are the thirdlargest economy in the world, and they can stop this if they want.”
The decision not to include toys and electronics came after hearings in recent weeks that convinced Kantor’s aides that so many toys are now produced exclusively in China that doubling the tariff would harm U.S. retailers and anger many consumers. “It didn’t take a political genius to see that we would be blamed for taking toys out of the hands of little kids,” one Clinton administration official said on Friday.
Administration officials said that they excluded most electronic components from the list of goods subject to sanctions after U.S. computer makers were told that China was the main supplier of a huge variety of cables and circuit boards used in U.S.-made personal computers. Imposing sanctions on those goods, Kantor concluded, would only work to the advantage of foreign computer makers.