Trade disputes China & US

The trade dispute between China and the United states is heating up.Several US Senators have been openly complaining about Chinese trade tactics and threaten to introduce legislation that would levey a special tariff on Chinese imports that would dramatically raise their price in the United States .
The US trade representative at the World trade Organization, Rob Portman believes that China maintains illegal trade barriers against US auto parts imports.They claim that the Chinese levy a 25 % tariff on imported car parts because the Americans have exceeded a quota imposed by China.China for its part insist that their system of levies is designed to encourage firms to use domestic parts and also avoid importing entire cars in the form of spare parts because of lower tarrifs associated with these parts. The Americans have been negotiating with the Chinese authorities over the past year but complain that they have made little headway.

The European Union has also complained about import restrictions and is allying with the US in seeking negotiations with the Chinese or failing a resolution within 60 days the establishment of a disputes settlement panel to resolve the complaint. In a Chinese auto parts market estimated at an annual figure of 19.1 billion dollars the Americans have managed to capture only 645 million dollars worth of car parts to date.(see Financial Times, March 31, 2006, Christopher Swann & Raphael Minder, US and EU in WTO challenge to China, p.1)

The controversy comes at a key point in relations between Chinas and the US.President Hu Jintao is due to visit the US shortly.

In addition to the political fallout any disruption of the multi billion dollar trade with China would be disruptive for the global economy as a whole.