At WTO, a growing U.S. record of wins against China, but a less than certain benefit

[xchrom]

http://www.washingtonpost.com/business/economy/at-the-wto-a-growing-us-record-of-wins-against-china-but-a-less-than-certain-benefit/2012/08/06/345fc5a2-d285-11e1-adf2-d56eb210cdcd_story.html

The United States has won an impressive string of victories against China at the World Trade Organization in the past few years but U.S. companies have seen only limited benefits, according to a review of the cases and interviews with analysts and officials familiar with them.

U.S. challenges, for example, have led to the repeal of Chinese import tariffs on American-made auto parts. But by the time the United States prevailed, China was well on its way — with the help of the protective tariffs — to developing its own industry for manufacturing engines, transmissions and other components, say U.S. auto industry officials. The repeal did little to stem the long-term movement of auto-parts work from America to China.

Another WTO case challenging Chinese restrictions on U.S. film exports led to a partial opening of China’s market. But China was able to maintain strict limits on how many major movie releases can be shown there each year, and studio box-office receipts are capped far below levels that prevail in the United States and other major markets.

The Obama administration has put enforcement of trade agreements at the heart of its approach toward China, the world’s second-largest economy and an aggressive economic competitor. The Geneva-based WTO, which oversees the world’s major trade treaties, is central to that effort.

[Selatius]

1. This doesn't really change the fact that we're now dependent upon China for manufacturing.

Everything is made in China.

The United States is no longer even able to manufacture consumer electronics and computer equipment without relying on China. There is simply no way American workers could ever compete on labor costs. That is why manufacturing centers were ripped up and moved to China in the first place.

Imagine the sheer chaos if in future decades India and China fought a major war and started blockading each others' ports during the conflict. Our trade ships wouldn't be able to bring back goods manufactured on the Asian mainland. That would cause major economic upheaval here. This is a national security issue.

[pampango]

2. Krugman: 85% of consumer spending in America is on American-produced goods and services

Barry Ritholtz sends us to a San Francisco Fed paper from last summer that makes a point on which many people seem confused: despite globalization and all that, the bulk of a consumer dollar spent in America falls on American-produced goods and services.

The reason this matters — or at least one reason it matters — is for discussion of austerity, stimulus, and all that. I often get comments along the lines of “Well, maybe stimulus worked back in the old days, but now it just means spending more on stuff from China”. In reality, that’s nowhere near true.

Why? For one thing, most consumer spending is on services, few of which are really tradable. For another, even if the thing you buy in WalMart says “Made in China”, the price includes a lot of US value-added in the form of transportation and retailing costs.



So we’re still a country where about 85 cents of your consumer dollar is spent at home, one way or another. And this means, among other things, that the rules of macroeconomics haven’t changed nearly as much as people imagine.

http://krugman.blogs.nytimes.com/2012/01/16/not-so-global/

Canadians spend about 75% on domestic goods and services, Germans about 70%, Swedes less than 60%. Americans spend more on domestic goods and services than Canadians, Germans or Swedes. Less than 2% of consumer spending here is on Chinese-produced goods.

Now Krugman may be full of shit, but that would be the exception to the rule since he usually knows what he is talking about.