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U.S. decides against China probe

The Bush administration announced Wednesday that it will not investigate alleged unfair trade and currency practices by China.
/ Source: The Associated Press

The Bush administration announced Wednesday that it has decided against launching unfair trade investigations into China’s currency practices and alleged violations of labor rights.

The decision in two high profile cases was announced by four top members of the administration’s economic team. They argued that the U.S. government had a better approach to get China to change its trade practices than threatening to impose punitive tariffs on Chinese imports into the United States.

The decision means that a complaint filed by organized labor in early March will not be accepted by the administration. The union movement had sought the imposition of tariffs of as much as 77 percent on Chinese products on the grounds that China was brutally repressing worker rights.

If the administration had taken the case and had begun a formal investigation, it could have led to an imposition of tariffs on Chinese products to compensate American companies for China’s labor practices.

The administration also announced that it will not look favorably on a case that American manufacturers have considered filing against China’s currency policy. U.S. manufacturers contend that China’s practice of linking its currency to the dollar has undervalued the Chinese currency by as much as 40 percent, giving Chinese manufacturers a huge competitive advantage against U.S. companies.

U.S. Special Trade Representative Robert Zoellick along with Treasury Secretary Robert Snow, Commerce Secretary Donald Evans and Labor Secretary Elaine Chao, argued at a joint news conference that the administration’s efforts at diplomatic engagement with Beijing on these two issues would produce more results than threatening punitive tariffs.

“Accepting these petitions would take us down the path of economic isolationism and that is a path we will not take,” Zoellick told reporters.