Proof the system can work if the Administration has the will.

A welcome victory for Washington.

The WTO Appellate Body on Monday ruled in Geneva that safeguard tariffs imposed by President Obama on China two years ago were legal under WTO rules.

We have followed this case since January 2010 Chinese Tire Appeal.

We advised the follow up:  WTO rules against China

Here is the link to  the WTO page on the dispute, where you can  choose various downloads of their findings WTO CHINA TYRES

While there are many ways that this “win” will be presented to us as “news”- the fact that we think will be ignored by all is that it is the continued “do nothing about the Chinese currency undervaluation” that  is keeping us disadvantaged economically.

This WTO victory shows us that when the administration has the will to pursue relief from unfair trading practices, the system can result in such relief being recognized as lawful.

So while some pundits will characterize this current WTO decision as a “Victory for Obama,” Victory for America,” or Victory for Unions”- the fact is that the real damage to America’s economy is the ongoing,  continued predation caused by the Chinese currency peg to the US Dollar. China devalues the yuan by 40%, making Chinese goods artifically inexpensive, stealing US manufacturing jobs.

We congratulate the Obama Administration for their work on the dumping of cheap Chinese tires. How about getting to work on the dumping of manufactured goods through the use of the undervalued yuan?

Facts for Fairness:  Neither the current  (Obama) nor prior  (Bush) administrations have done anything about the Chinese currency manipulation and its mercantilist consequences except talk. And for the record, the Chinese joined the WTO under the auspices and consent of the Clinton administration.

WTO Summary and findings

PDF Just the conclusions


The Precision Machined Products Association recently joined forces with the Forging Industry Association, Industrial Fasteners Institute, National Association for Surface Finishing, National Tooling and Machining Association and the Precision Metalforming Association in a formal letter to U.S. Treasury Secretary, Timothy Geithner, asking the Secretary to cite China as an illegal currency manipulator in the Treasury Department’s Semi-Annual Report on International Economic and Exchange Rate Policies.
This joint letter urges Secretary Geithner to take action on this critical issue facing domestic manufacturers. Review the formal letter here.

China's currency manipulation puts rest of world at a disadvantage.

Why is the China Currency Issue important?
It is a threat to the Global Economy.

If China continues to beggar the world with its currency manipulation, as it dumps cheap products here, and stockpiles currency reserves, we will continue to suffer from  

Direct result of currrency manipulation.

  1. Global trade imbalances;
  2. Unemployment (especially manufacturing unemployment) in the US 
  3. Increasing pressure for protectionism everywhere.

 How much is the Yuan undervalued? A mere 40% according to Bryan Rich.
“While most of China’s major economic competitors around the world have seen their currencies climb against the dollar by 20%, 30%,40%, even 50% in the last eight months, the Chinese yuan has been virtually unchanged” he wrote last October.

40 % undervalue currency exports unemployment to USA.

Money and Markets Graph
What can you do? We’re glad you asked!
Send Action Alert to your officials.

The World Trade Organization (WTO)  established an expert panel January 19th  to investigate and rule whether punitive U.S. tariffs on Chinese-made tires breach WTO regulations.

President Barack Obama approved punitive tariffs up to 35 percent on all car and light truck tires from China last September in an attempt to “remedy the clear disruption to the U.S. tire industry.”
The expert panel was established at a meeting of the WTO’s Dispute Settlement Body (DSB). China reiterated its position that the U.S. tariffs “run short of factual bases and breached the U.S. obligations under the WTO.”
“The Chinese government deeply regretted the U.S. decision to impose restrictions on Chinese tires and believed it was a departure of international consensus of G20 leaders to fight against protectionism,” the Chinese delegation said.

No word that the Chinese Government had any regret on currency manipulation.
 The WTO expert panel usually consists of three members, and it takes up to 45 days for them to be appointed. The panel will need at least half a year to issue its final report.
Photo credit.