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To Trade Or Not To Trade? China’s Most Favored Nation Trading Status Is Again Before Congress. In Opposing Articles, Secretary Of State Madeleine Albright And Joel Joseph, A Fair-Trade Advocate, Debate The Issue.

Every year Congress and the president wage a bloody battle over the so-called “most favored nation” trade status for China. This confrontation accomplishes nothing, except angering all parties to the issue. While the brawl takes place at center stage, China sits this fight out and laughs on the sidelines.

China is quietly reveling in the knowledge that it always gets its way. For more than 20 years in a row, China has received MFN status.

Americans may not realize it, but the United States provides most nations, including China, with lower tariffs than American products receive overseas.

We have a huge and growing trade imbalance with China; it’s now approaching one billion dollars per week. This year China will overtake Japan as the largest contributor to the U.S. trade deficit - as well as being the largest foreign contributor to American political campaigns.

The major reason we have a trade deficit with the Middle Kingdom (China calls itself the Middle Kingdom because of its belief that China is the center of the world) is that it imposes astronomical tariffs on American products. The United States sells very little to China because of these exorbitant taxes.

China places an import tax of 50 percent to 120 percent on American cars. A $12,000 Saturn would sell for $18,000 or more in China. The United States charges Most Favored Nations a 4 percent duty on cars. Least Favored Nations would theoretically be charged 25 percent, one-half of the lowest rate charged by China, but no LFN nations manufacture cars. China wants foreign car manufacturers to produce the cars in China and does not want vehicles to be imported.

One of the largest exports from China to the United States is shoes, athletic shoes as well as leather shoes. China charges a duty of 50 percent on imported athletic shoes and 60 percent on leather shoes. Meanwhile, for shoes imported by the United States MFN status provides a 13.4 percent tariff. LFN status for shoes is 35 percent.

If you have shopped at a Toys R Us lately you would realize that toys are one of the largest exports from the Middle Kingdom. The store should be renamed Chinese Toys R Us since more than 50 percent of its products are from China. The United States does not charge a tariff on toys coming from MFN nations. LFN nations get a hefty 70 percent tax. China charges U.S. toymakers a duty of 40 percent.

The same unequal treatment takes place concerning clothing, computers, bicycles and air conditioners. Clothing is a huge Chinese export which we tax from 8 percent to 20 percent while China taxes our clothing at a 35 percent rate. We don’t have a duty on electronic products like computers, except for LFN nations who are charged at a 35 percent rate. China sells millions of bicycles in the United States because we only charge an 11 percent tariff. We don’t sell many bicycles in China because they charge us 50 percent.

No one would call this a fair system. It is neither fair nor free trade. It is rigged trade.

I want to change the congressional discussion from whether China should get MFN or not to whether we are treated fairly by China. Congress can pass a law immediately which raises Chinese tariffs to the same level charged by China on U.S. products. If that wouldn’t level the playing field quickly, I don’t know what would. It would put the ball in China’s court and make them reform their markets fast. We should trade with China, but on more reasonable terms. We should negotiate with China over a wide variety of issues from human rights and workers’ rights to the sale of nuclear materials. When we replace our annual squabble over MFN for China with meaningful bilateral negotiations we can use our leverage to obtain a better deal. And miraculously, our massive trade deficit with China will come tumbling down.

MEMO: Joel D. Joseph is chairman of the Made in the USA Foundation, a nonprofit organization based in Washington, D.C. and dedicated to promoting American products in the United States and overseas.

See opposing view by Madeleine K. Albright under the headline: To trade or not to trade?

Joel D. Joseph is chairman of the Made in the USA Foundation, a nonprofit organization based in Washington, D.C. and dedicated to promoting American products in the United States and overseas.

See opposing view by Madeleine K. Albright under the headline: To trade or not to trade?



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