International Trade Policy And Economic Development

Student Help Government Policy and International Trade Chapter 7 In the 15 years up toChina increased its steel production fivefold as it forged the steel products demanded by its huge boom in construction and infrastructure spending.

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Bythe country produced million tons of steel a year, half of the worlds annual output. However, in the bottom fell out of the Chinese domestic market for steel. The economy slowed down, International Trade Policy And Economic Development the government shifted its priorities away from massive infrastructure investments and to- ward boosting consumer spending. By the end ofChinese steelmakers were estimated to be producing million more tons of steel a year than required for domestic consumption. Not sur- prisingly, the Chinese are seeking to export this un- wanted product, even if it is at a loss. China exported more than million tons of steel for the first time inmaking its steel exports alone larger than the pro- duction of any other country in the world except for Japan.

The prices for Chinese steel products appear to be at least 10 percent lower outside of China than within the country. Those low-priced exports are having a devastating im- pact on steelmakers around the globe.

American produc- ers have responded by clamoring for action from the U. Commerce Department to stop what they perceive to be the illegal dumping of steel products below the costs of production. Moreover, they have argued that cheap steel from China has also persuaded producers in India, Italy, South Korea, and Taiwan to dump their excess produc- tion on the world market, further harming U. In Novemberthe Commerce Department ruled that all of these countries except Taiwan were dumping steel and placed duties as high as percent on some imports of foreign steel. In late December, the Commerce Department ruled that China was also selling corrosion- resistant steel at unfairly low prices and placed an addi- tional percent tariff on such imports. This erected a huge barrier to certain Chinese here imports into International Trade Policy And Economic Development United States.

The European Union also took similar steps. The United Kingdom has been particularly hard hit by Chinese imports. Chinese imports now take 45 percent of the UK market for steel rebar, up from nothing in Overall, steel imports from China doubled between and The United Kingdom lost some 4, steelmaking jobs in the second half of as the Chinese grabbed market share.

In response, in Januarythe EU placed a 13 percent tariff on imports of Chinese steel. EU steel- makers called this totally inadequate, particularly given the much large tariffs levied in the United States. In mid, the EU responded by placing tariffs as high as 22 percent on imports of nonstainless steel prod- ucts from China.

For its part, the Chinese government remained unmoved. In fact, it may have added fuel to the fire in December when it cut export taxes on several types of steel, signaling perhaps that it was dou- bling down on a strategy to encourage domestic pro- ducers to export their surplus production rather than close mills. Sources: Sonja Elmquist, U. Case Discuss ion Quest ions 1. Does the evidence suggest to you that China is dumping excess steel production on world markets?

Absent of any response from other nations, how long can China pursue this policy? Who is harmed by this action?

Who might benefit? What alternative policy might China pursue? What are the costs and benefits of this alternative policy to China? Are the EU and the United States correct to im- pose significant antidumping duties on imports of Chinese steel?]

The answer: International Trade Policy And Economic Development

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International Trade Policy And Economic Development.