The Bush administration has lodged complaints against China three times in the last three months. If Bush wants a methodical working of some of the difficult issues raised by a growing trade relationship, this could still prove to be a productive effort. But if these complaints add up to the hesitant first steps toward an all-out trade war with China, everyone will lose.
The administration announced it was filing two cases against China at the WTO. The first is over Chinaâ€™s failure to crack down on pirated goods like movies and books. It will also challenge Chinese restrictions on the distribution of foreign films, music and more. What must be avoided are the kinds of misunderstandings â€” intensified by growing anti-China sentiment in the US â€” that lead to tit-for-tat tariff reprisals until things spin out of control. A trade war would do more harm to American business than to Chinaâ€™s subsidies. What would happen to Boeing if the steel used in its jets became more expensive? The last thing a country with a record trade deficit can afford is to hurt its exporters.
If used correctly, pressures like the paper duties could help convince Chinaâ€™s leadership that its businesses would be more efficient and its economy stronger if they were weaned off subsidies. That would do a lot more good.