Bruce Bartlett

On Nov. 18, the Bush administration announced a decision to impose new trade restrictions on imports of some Chinese textiles. Although rationalized as a means of saving American manufacturing jobs, no trade expert thinks it will have more than a trivial effect in this regard. Its principal impact will be to further enrich a few wealthy Republican businessmen, by protecting them from competition, while further impoverishing the poorest members of our society, by making them pay more for clothing. This action is utterly unjustified and disgraceful.

A petition from four textile industry groups, led by South Carolina Republican textile magnate Roger Milliken, alleging that Chinese imports "threatened to impede the orderly development of trade and caused market disruption in the U.S.," initiated the new trade restrictions. No proof was offered to support this allegation. The mere fact that imports of Chinese textiles have risen in recent years, which is all the petition demonstrated, is legally insufficient to prove market disruption. The claim was simply asserted and should have been dismissed out of hand.

To show just how absurd this is, one of the new trade restrictions applies to brassieres. Yet there is no domestic manufacturer of this product. Some components are produced here, but all are exported to low-wage countries in Latin America for manufacture. This is done solely because of a law requiring a degree of domestic content in order to avoid trade barriers when the final product is imported. In other words, it is entirely an artificial arrangement. The reality is that 100 percent of brassieres are imported, so there really is no domestic industry to protect.

Furthermore, there is no evidence that China has a protected market, which might justify some sort of action. Although China likely will run a trade surplus with us of more than $100 billion this year, the International Monetary Fund estimates that its overall surplus will be just $25 billion. In other words, China runs a deficit with the rest of the world. Moreover, the IMF rejects the idea that China is artificially holding its currency down to stimulate exports and hinder imports. "There is no clear evidence that the renminbi is substantially undervalued at this juncture," it concluded in a Nov. 18 report.

Viewed in isolation, these new restrictions won't have much of an impact, since they apply to just $10 billion of imports -- not much in a $10 trillion economy. But it is important to understand that they come on top of existing trade protection that already costs Americans billions of dollars per year.


Bruce Bartlett

Bruce Bartlett is a former senior fellow with the National Center for Policy Analysis of Dallas, Texas. Bartlett is a prolific author, having published over 900 articles in national publications, and prominent magazines and published four books, including Reaganomics: Supply-Side Economics in Action.

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