[Intl-tobacco] Study: China Deal May Hurt Deficit (fwd)

[Robert Weissman]

This is worth reading through for the bit on tobacco. More information on
this topic following this post.

Robert Weissman
Essential Information=09=09=09|   Internet:=09rob@essential.org

Study: China Deal May Hurt Deficit
by Martin Crutsinger / AP Economics Writer
Monday, May 22, 2000; 3:53 p.m. EDT

WASHINGTON =96=96 Supporters of a landmark trade bill with China have a
ticklish problem =96 the government's major study of the measure indicates
it will make America's already huge trade deficit with China worse rather
than better.

U.S. Trade Representative Charlene Barshefksy, who requested the review,
calls the finished product "a very incomplete study, and to be frank, not
much utilized."

But opponents have gleefully seized on the report by the U.S.
International Trade Commission to do their own analysis projecting the
China deal will result in the loss of 872,000 American jobs over the next
decade.

Preposterous, says the Clinton administration, which published its own
state-by-state assessment that proclaimed the China deal would "open new
export and employment opportunities in all 50 states."

As in the huge debate over free trade with Mexico in 1993, supporters and
opponents offer starkly different views of the future if Congress passes
legislation that would end the annual congressional review of China's
trade privileges.

President Clinton and his economic team contend the China agreement is a
no-brainer. All the trade concessions are being made by China. In return
for America's support for its bid to join the World Trade Organization,
China would dismantle barriers that U.S. corporations and farmers have
long complained about.

The trade commission did predict that U.S. exports would rise by 10
percent.  The study said the biggest benefits would go to American
farmers, especially those producing cotton, tobacco and vegetable oils,
and industries making paper, chemicals, plastics and airplanes.

But the trade commission also predicted that imports from China to the
United States would rise by 7 percent. Although U.S. trade barriers are
not being changed, China's products will become more competitive on world
markets as the country's efficiency improves by lowering its own barriers.

Since China already sells $6 in the U.S. market for every $1 American
manages to sell in China, the trade commission's projections would mean an
increase in America's trade deficit with China.

That deficit hit a record $68.7 billion last year, the largest for any
country other than Japan. Chinese imports totaled $81.8 billion,
reflecting that it is America's No. 1 supplier of toys, apparel, shoes and
consumer electronics. U.S.  exports to China totaled just $13.1 billion.

Like the ITC report, a study by the Economic Policy Institute, a
labor-supported think tank, called "Labor and the States," projected that
over the next decade, U.S. job losses would total 872,091 with every
industry suffering. California led all states with 84,294 lost jobs.

"This is a very conservative estimate of job losses," said Robert Scott,
author of the EPI study. "It assumes that China will live up to the
agreement and not devalue its currency to gain competitive advantage."

The administration, however, contends the job-loss report wrongly assumes
that the gains made when the agreement is fully phased in will continue
multiplying at the same high rate over the next decade.

Barshefsky also attacked the ITC report's methodology because it focused
only on tariff cuts and not the benefits from the removal of non-tariff
barriers.

"It is a terribly incomplete study because it only assumes tariff
reductions,"  she told The Associated Press in an interview. "It didn't
factor in things like trading rights and rights of distribution."

New York investment firm Goldman Sachs has estimated that by 2005, U.S.
exports to China could be $13.9 billion higher, double the current level,
with 57 percent of the gain coming from the tariff cuts, 26 percent from
the elimination of non-tariff barriers and the rest coming from higher
U.S.  investment in the country.

But organized labor says rising U.S. investment in China will simply mean
more U.S. companies building factories in China to take advantage of cheap
wages.

"We've seen a lot of good jobs become bad jobs =96 13-cent an hour jobs,
child labor jobs, forced labor jobs," says AFL-CIO President John Sweeney.
"That is the pattern that corporations take when they invest in other
countries."

=96=96=96

The bills are H.R. 4444 and S. 2277

On the Net: White House site: http://www.chinapntr.gov

AFL-CIO site: http://www.aflcio.org/publ/press2000/pr0222.htm

=A9 Copyright 2000 The Associated Press

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