CHINA: U.S. Slaps Three Billion Dollars in Sanctions on Beijing

By Farhan Haq Reprint | | Print |

WASHINGTON, May 15 1996 (IPS) - Chinese textile and apparel companies accounting for three billion dollars of the country’s U.S. exports will be hit by 100-percent tariffs within 30 days, U.S. officials announced Wednesday.

The stiff sanctions, which would double the price of a wide range of clothes coming to U.S. markets from China, are largely designed to crack down on Chinese “piracy” of U.S. copyrights, mainly in the entertainment industry and computer software.

Following the breakdown of talks between the United States and China Tuesday, Charlene Barshefsky, the acting U.S. trade representative, said that sanctions are needed to prod Beijing to live up to the 1974 trade agreement between the two countries.

“Unfortunately, the Chinese still have not taken key actions to enforce the trade agreement,” Barshefsky said. In particular, U.S. companies have scolded China for failing to crack down on unauthorised copying of U.S. movie videos, music cassettes and CDs and computer CD-ROMs.

The pirating of software and entertainment products, however, is especially important to U.S. President Bill Clinton, who has gained significant political support from large entertainment conglomerates like Time/Warner. In order to win re-election this November, Clinton especially depends on pleassing California-based software and media outlets, since Clinton’s Democratic Party must capture California to fare well in the elections.

In recent days of talks, China has claimed it is unable to control the burgeoning entertainment and software industries. But U.S. officials, dubious of the extent to which Beijing has relinquished state control over industries, are sceptical.

“This is not a question of ability, it is a question of political will,” Barshefsky said. She noted that, when Beijing wanted to respond last year to U.S. complaints to police pornographic CD-ROMs produced in China, the industry was “shut down overnight”.

White House spokesman Mike McCurry said that China will now have 30 days to comment on the sanctions list and negotiate with the United States. During that time, one U.S. official said here, the list is expected to be whittled down to only some two billion dollars’ worth of exports.

The amount of trade that U.S. businesses claim is lost through unauthorised copying of U.S. patents, designs and copyrights — the violation of “intellectual property rights” — is also estimated to be two billion dollars a year. Total Chinese exports to the United States, meanwhile, have surged to 40 billion dollars yearly.

Barshefsky said the sanctions would place 100-percent tariffs mainly on textile and apparel companies. Those companies, she added, “account for over one-quarter of China’s exports to the world”. Most of the targeted companies, she noted, are in Guangdong province, a site she claimed is “notorious for piracy”.

The trade official sought to downplay any negative effects on U.S. consumers from the sanctions, noting that the targeted products “represent less than one-seventh of one percent of the 205-billion-dollar U.S. textile and apparel market.”

However, U.S. officials are wary that China may respond to the sanctions by announcing its own list of U.S. companies to be hit by new tariffs. Analysts here warn that a trade war is likely if the two sides cannot reach a compromise soon.

Despite the harsh tone as Barshefsky announced the sanctions, President Clinton remains eager to remain on good standing with Beijing. In recent days, Clinton and Senate Majority Leader Robert Dole have united to insist that China’s Most Favoured Nation status, which allows it preferential trading links to U.S. markets, will be extended in early June.

In taking that step, Clinton and Dole — the two main contenders for the presidential elections this November — set aside the hot political debate over whether China’s trade should suffer because of Beijing’s poor human rights record.

U.S. officials are adamant that, regardless of the current standoff over trade, human rights issues and other controversies should not damage ties between Beijing and Washington.

The U.S.-China link, McCurry said, is “an enormously important relationship to the people of the United States, who are involved in commerce increasingly directed at what will become one of the world’s largest markets in the next century, if not the largest market.”

“We can’t afford for this relationship to spiral downward,” U.S. State Department spoksman Nicholas Burns agreed. “We will meet them half-way.”

Already, U.S.-Chinese relations have been at an ebb, particularly since the U.S. Navy sent warships into the Taiwan Straits last month in response to Chinese military exercises near Taiwan just prior to the island’s presidential elections.

Other issues, including China’s sale of nuclear technology to Pakistan, have also chilled the relationship — yet none of those problems has dented the two country’s growing economic ties.

Even with the prospect of a trade war looming, McCurry added, “we remain hopeful that can resolve this conflict short of any tit-for-tat retaliation”.