Trade barriers to be caused by American stimulus plan
A series of trade barriers will be caused by the “buy American” products only clause in the $787-billion US economic stimulus package while large exporters, such as China will be hurt by this move, economists said last Sunday.
It is obvious that trade protection is certain to rise, said Mei Xinyu, a trade expert form the Ministry of Commerce. The current situation will stay for some time, he said, referring to the lasting effects caused by the US stimulus package.
The package was passed late on Friday with the proposal of distributing tens of billion of dollars into public building projects, and tends to impose conditions, for instance, only US-made steel and products can be used.
Mei also said that China could be greatly suffered from the action since it is a major manufacturing exporter that supplied enormous goods to all the other countries.
The trade barrier comes when efforts are needed to fight the devastated economic crisis in more than fifty years.
It is impossible that protectionism will do any good to anyone, said Feng Jun, a Shanghai-based WTO expert, the package is not feasible in the age of globalization since the world today is not the same as that of the 1930.
He added that the “buy American” plan “is impossible to work”. On the contrary, it would cause trade barriers. At the same time, “short-sighted” governments will constrains foreign products and overseas investments to protect jobs and industries within the country.
Mei doesn’t agree with the move that China will not use protectionism when implementing its $586-billion stimulus package. He urged Chinese government to create an even favorable field for domestic business under the WTO framework. “We should not wait to be a victim,” he said.
It is found that the number of anti-dumping and anti-subsidy investigations into Chinese products has increased. For example, India has made an announcement that it’s 17 “trade remedy” will be made to restrict Chinese products since October 2008.
Over the weekend, Group of Seven (G7) finance ministers promised that they will not use protectionism in the process of making efforts to stimulate their domestic economies to fight the world’s most awful economic crisis.
Italian Finance Minister Giulio Tremonti, the meeting’s host, said the other ministers insisted on offending protectionism. It is a specific dangerous thing not only for economies which is heavily based on exports, he said in Rome.
US Treasury Secretary Timothy Geithner made an assurance to his competitors that the $787-billion package would not break the US’s promise of free trade.
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