And so the Trade Battle Begins

I am a strong proponent of fair trade principals and I reject any idea that this country has "free trade" policies. One of the biggest trade problems facing businesses in this country are the unfair trade practices perpetuated by the Chinese government. Finally, the Bush administration has begun to deal with these:

The Bush administration, facing heavy pressure to deal with soaring trade deficits, said Friday it is imposing economic sanctions against China to protect American paper producers from unfair Chinese government subsidies.

The action means that China's imports of glossy paper will be subjected to tariffs ranging from 10.9 percent up to 20.4 percent as a penalty for subsidies that the Chinese government is providing for its own companies. Those extra duties will be imposed immediately on a preliminary basis pending further review in coming months to set the final penalty margin.

The case, which was brought by NewPage Corp., was being closely watched by a number of other U.S. industries from steel to furniture.

For two decades, the U.S. government has held that American companies did not have a right to challenge government subsidies granted to their foreign competitors if those companies were in "nonmarket economies" such as China.

However, last year, the administration let it be known that it was ready to consider reversing that policy.

President Bush is facing heavy political pressure from Congress, now in the hands of Democrats, to deal with soaring U.S. trade deficits, including a record $232.5 billion imbalance with China.

Dealing with unfair subsidies is only the beginning. Counterfeiting is still a big problem and the Chinese government continues to devalue their currency relative to ours giving them an unfair trade advantage. Looks like this administration is going to start dealing with the currency problem next:

The fact that the Bush administration made it known last year that it was now willing to consider cases against China involving government subsidies was seen as part of a new get-tough approach in the face of soaring U.S. trade deficits.

Treasury Secretary Henry Paulson is leading an effort to pressure China to allow its currency to rise in value against the dollar. American manufacturers contend that China is devaluing its currency by as much as 40 percent to give the country unfair trade advantages.

The Bush administration is trying to get out in front of the looming trade battle that's going to take place within Congress in a couple of months. This is a good first step and I think American companies and workers will benefit from this (and future) policy changes...