April 23, 2004

Free Trade and China
Posted by McQ

Seems our trade negotiators have done some good in the area of free trade and China according to the Christian Science Monitor:

In the agreement, China agreed to allow US firms to distribute their goods to Chinese stores without going through state-run enterprises. It also promised to launch a new crackdown on copyright pirates, who cost the US industry in CDs, movies, and software more than $2 billion a year. (China is the world's largest copyright scofflaw.)

China also will reduce more barriers to food exports while US express-delivery firms will have more freedom to operate in China. And US exporters of computers and mobile phones won't face a potential trade barrier that China had proposed for June 1.

All this is a blow to protectionists who prefer to limit China's imports rather than further opening the huge Chinese market to competitive US exports. Last fall, Beijing promised to "basically balance" trade with the US - the trade deficit with China hit a record $124 billion last year - and step by step it's making its companies more vulnerable to market forces.

It still needs to loosen the reins on its overvalued currency, for its own sake in preventing inflation but also to raise prices on exports. And Beijing needs to show more follow-through in implementing trade deals.

This is good news for US companies and is a long overdue development in terms of balance of trade. Obviously, it remains to be seen if China will actually live up to the bargain. Regardless, politically, this is something the Bush administration can tout as a "win" for the US economy.

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