Reactions on Chinese tires

By James Fallows

In this item two days ago, I mentioned that most of the mainstream economics press had gone (predictably) berserk in overreacting to the shock-horror nightmare of the Obama administration's tariff on imported Chinese tires.

First point: I neglected to mention the honorable exception of Andrew Peaple, reporting in the WSJ and playing down "Oh no! Smoot Hawley!" hysteria from the start. The online version of his initial story:

"WSJA(9/15) Heard On The Street: Tires, Chickens, Common Sense
   (From THE WALL STREET JOURNAL ASIA)
   By Andrew Peaple
"Fought over the likes of bras and bananas, trade wars always give off a whiff of the absurd.

"With a measure of good sense, a spat between the U.S. and China involving tires and chickens won't devolve into a trade war as well."

Unfortunately, the version of the story that is now online has a much more alarmist headline, though the common-sense content of the article itself is still the same. Here's the new headline:
WSJChicken.jpg

Next, from someone with on-scene experience, making a point left out of most of the reflexive, "Oh no! Smoot Hawley!" original coverage

"I was a senior International Trade consultant with 2 major firms in China 2003-2007.   Approximately one third of the over 100 projects I managed during that four year period involved assisting foreign companies (US, EU, some Japanese) in defending themselves against either investigations by, or anti-competitive practices perpetrated by, the Chinese Customs authorities. 

"I believe that I can safely say that without fail, each project of this type that I was involved in was predicated by a distortion or willful misunderstanding of both Chinese and WTO/WCO trade law and operational norms by the Customs authorities.  Nor were these actions limited to provincial backwaters (though the most egregious did take place there); many of our projects involved Shanghai or Beijing Customs entry ports.  Practices such as demanding improper HTS classification of goods (HTS classification determines applicable duty rate) or arbitrary valuation of goods (the Customs declared value upon which duty and VAT are assessed) are practiced daily throughout the country and cost foreign companies substantial amounts.

"I very seldom see this issue addressed in any article concerning China trade and thought I would bring it to your attention."

Main point: this is a far more complicated issue, with a far longer and more tangled history, than 95% of the western-press reaction would indicate. I urge everyone to keep up with this "China Financial Markets site before expressing heated opinions on the subject.

Update: there's actually no material after the jump; original posting included some background notes, by mistake. But our system retains the "continue reading" link even with nothing there any more.


This article available online at:

http://www.theatlantic.com/technology/archive/2009/09/reactions-on-chinese-tires/27265/