By Denna Bowman
The Obama administration’s first real test on trade policy is just round the corner.
The US president must decide whether to impose new import restrictions on Chinese tyres under what is known as its “China safeguard” law.
However, the decision relating to the tyres is not just a test of Barack Obama’s support for free trade – it is building up to be a defining moment for the anti-trade issue, according to a report in the Financial Times.
History could well record it as the defining moment when the multilateral trading system was able – or not – to withstand the crisis-provoked protectionist forces that currently threaten to bring it down.
The World Bank-sponsored Global Antidumping Database suggests that, since the economic turmoil began, countries have been ganging up to use World Trade Organisation rules in an almost mob-like response to restrict imports from China.
The US tyres case began in April when the United Steelworkers union asked the government to investigate tyre imports from China.
By June, the US International Trade Commission recommended the president impose a new 55 per cent tariff.
President Obama has the discretion under the law to accept this, offer a different package of assistance to the steelworkers or dismiss the case.
One way round the problem would be for the US administration in the imminent China-safeguard decision over tyres is to decline to implement new trade barriers, but to offer the adversely affected communities in the US help through adjustment assistance programmes.
Doing so will help the US stand up for the trading system and counter the crisis-driven mob mentality that threatens to bring it down.
The President is expected to make his decision later next month.