America’s (Not so free) Trade Policy

August 11, 2007 at 7:48 am Leave a comment

While US policymakers have always boasted about the gains from free international trade, urging their counterparts in other countries to lower tariffs and other trade barriers, America seems to be following their own strategy of “free trade”.

The US Finance Committee recently voted 20 -1 to give the government new tools to press China to raise the value of its currency, in light of the mounting budget deficit US has against the rising superpower. A significant provision made in the Bill is to take “currency undervaluation” into account when calculating anti-dumping duties on foreign goods.

The question is though, how can one justify such measures of protection when firstly, US continues to preach the benefits of free trade to other countries, urging them to lower barriers to trade, while at the same time, US imposes its own set of barriers against what they argue as “unfair” trade practices. Sure, the low yuan is negatively affecting US export/import balances; but won’t it be more politically correct to discuss these issues with their Chinese counterparts and come to a peaceful agreement regarding the situation as opposed to imposing anti-free trade practices which could lead to further retaliation by China?

If China retaliates with their own set of protective measures against the US, the situation can only get worse for both countries where NO country benefits from trade protection.


Entry filed under: America, International Economics.

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