Monday, September 19, 2011

Blame China, ctd? (UPDATED)

Reuters reports that USTR circulated a very interesting pre-announcement this afternoon:
U.S. trade officials will announce a major trade enforcement action against China on Tuesday, according to an advisory from the U.S. Trade Representative's office.

The advisory, which was obtained from a business group, said U.S. Trade Representative Ron Kirk "will hold a press conference to announce a major trade enforcement action against China." It gave no other details.
I have no idea what this big "enforcement action" is about, but I have a few guesses and each relates to this recent analysis of what happens when massive government "investments" inevitably go sour:
At this point, we're clearly out of money and the House GOP isn't breaking out the credit card anytime soon, so DOE's implicit calls for more green energy subsidies are almost certainly going to go unheeded (thank goodness).  And with very-public failures like Solyndra putting a very-public spotlight on the Obama administration's green energy money pit, scapegoats are going to be needed.  On green technology, China has clearly become the President's first choice: indeed, the Energy Department has been left to implicitly deride Chinese subsidies instead of openly praising the significant proliferation in "cheap" solar power that's mentioned in its very own press release!  But one must wonder whether, if/when several other of President Obama's green poster children go belly up, will the "China blame game" be enough to salvage the President's political prospects? Or will protectionism - and an inevitable confrontation with one of America's largest trading partners - be the administration's next move?

I don't know the answer to these questions; nobody does. But last sentence of the DOE release [on Solyndra's bankruptcy] could be a warning as to which way the Obama administration is leaning: "While we are disappointed by this outcome, we continue to believe the clean energy jobs race is one that America can, must and will win."

Shudder to think how they'll try to rig the game to ensure that "victory."
Reuters has more speculation, most of it along the same lines as I laid out:
One possible action could target China's export restrictions on rare earths, which are crucial for global electronics production and the defense and renewable energy industries.

They are also used in a wide range of consumer products from iPhones to electric car motors. The United States, the European Union and Mexico recently won a case against China for similar restrictions on exports of raw materials used in steel and other industrial products. China appealed that decision and a final ruling is still months away.

In recent weeks, Democrats have raised alarm about Chinese solar panel subsidies that they said are driving U.S. producers out of business. They also hae pressed Kirk's office to investigate charges China is pressing GM to turn over technologies for its electric car, the Chevrolet Volt, in order for it to qualify for generous Chinese government subsidies to encourage consumers to buy it.

Many Democrats also have long complained about China's currency practices and have urged the U.S. Trade Representative's office to bring a case. Republican presidential candidate Mitt Romney recently criticized President Barack Obama for not doing more to push China to raise the value of its yuan against the dollar.

A currency case would be a major departure for the Obama administration after refusing to formally label China as a "currency manipulator" in a Treasury Department report.
So could the Obama administration's formal "Blame China" strategy be starting tomorrow morning?  (If it ends up being a currency case, all I can say is "Thanks, Mitt.")

Stay tuned.

UPDATE: They really needed a mysterious "pre-announcement" for this?  Really?

Sept. 20 (Bloomberg) -- The U.S. will file a complaint with the World Trade Organization today against anti-dumping duties imposed by China on chicken imports, according to a congressional aide and a second person familiar with the matter.
Now I feel silly for even mentioning it.  Sorry, folks.

No comments: