Economics, International economy

‘Free and Fair Trade’?

We know we are living in interesting times when a Chinese vice premier stakes out a position that the United States and China should oppose all forms of protectionism, while his American counterparts talk about the Obama administration’s commitment to so-called “free and fair trade” (whatever that is supposed to mean).

That’s just what happened at the US-China Joint Committee on Commerce and Trade (JCCT) talks in Hangzhou earlier today. Apparently, a collection of trade spats—on President Obama’s September 11 decision to impose a safeguard on Chinese tires, the Chinese responding in kind on U.S. auto parts and chickens, as well as other disputes—is making for a tough JCCT.

It’s no surprise that, in the age of the Obama administration’s protectionist inclinations, there seems to be a complete disconnect between the anti-provocation approach with China—i.e., turning down a meeting with the Dalai Lama and backing off on the administration’s initial stance of China’s status as a currency manipulator—and the administration’s stance on trade. There seems to be a miscalculation regarding the importance of trade to China and a misunderstanding of the damage being caused to the U.S. reputation in this area vis-a-vis China and the rest of the world.

The United States needs to be tough on Chinese trade barriers, especially given that the United States offers China the largest, most open market in the world for its products. However, by U.S. abdication of leadership in trade we have no leg to stand on in pressing China to do anything in this regard. So, maybe that’s the strategy?

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