Coolhand-
You posted earlier today about what Stratfor was saying about the tire deal. It's a lot more complicated than what you had posted.
The main thing this is about is not trying to get or keep Union people supporting health care. The main thing this is about is exercising existing law and trade agreements that were crucial when the last administration extended "normal trading status" with China.
China is the big, big problem. In the 1990's, China wanted "Most Favored Nation Status" for years and years. When we finally signed a trade agreement with them, and gave them such status, it was contingent on them doing a number of things- which so far they have not done, and it has devastated American industry as a result.
They had agreed to language in that agreement, that in the event any industry was adversely affected, and it was because of something the Chinese Government had done (or failed to do), that there was a provision that the U. S. could impose a number of different remedies in order to slow down the destruction of U.S. industry. One of those agreement protocols was that the U.S. could impose duties (tariffs) if a case could be proved, but only for a short time, to give the U.S. industry time to adjust to the changes in China trade.
Many, many workers were displaced in the Bush II years, and many tried to have the Government invoke those provisions. But Bush II refused to enforce the law and treaty as written. The biggest problem was the value of the Yuan/Dollar exchange rate. Rather than float on the open market, which is does all over the rest of the world- the Communist Chinese fix the dollars/Yaun rate at a fixed price. Most observers say it undervalues the Yaun by at least 50% or more. If there were free markets, the free markets would correct the imbalance. But China is pushing growth so fast, and refusing to let the Yuan.
Tires is just one industry devastated by China trade. But it has a clear and convincing evidence to show that China's government owned production plants, and undervalued Yuan, has destroyed American industry without enough time to let free markets correct the problem.
Here is the dollar/Yuan exchange rate chart, from MSN. FIrst, you'll see years and years of fixed rates. After Bush II received a lot of pressure (remember the economic slowdown following Sept 11th), Bush II refused to invoke the law, but he did make some waves with China about freeing up the currency. He was promised a free-floating currency. However, what the Chinese Government did was only allow it to move a tiny fraction of an amount each month, so slow that American still could not see any benefit from the movement- but enough of movement to prevent the WTO from acting.
Here is the chart:
View attachment 6810 As you can see, the Yuan rate was pegged for years. When they finally allowed it to move, it moved VERY slowly.
Union workers were among those who elected Obama, on Obama's promise to finally enforce the trade laws already in existance. The United Steel workers filed a substantial case last spring, and, for the first time, our President has acted in accordance with our treaty.
Point #1 on the chart shows where China finally agreed to allow some movement in the Yuan.
But as you can see, at Point #2- they STOPPED devaluing it, even though it continues by free-market standards to be WAY undervalued- still considered by most to be 40% undervalued now.
The point of the tire tarrifs imposed this week, is to give time to the U.S. industry to renegotiate contracts with U.S. workers at lower rates, to keep them competitive with Chinese tires. And also to give time to the Yuan to be devalued some more, to get it more in line with where it is supposed to be.
A trade-off to get support for health care? No, not really. More like making sure that American industry can compete on a level playing field, and making sure that China knows we are serious this time. Much more direct than previously, AND fully within the existing trade agreement. The WTO won't blink twice at this, as it is in writing, and part of the agreement. No unfair trade practice in imposing the tariffs.
If we don't get U.S. / China trade in balance soon, and we don't get a handle on the trade deficit with Oil imports, we're going to be in even more of a world of hurt than we already are:
View attachment 6809
Is the move to put temporary tariffs on Tires within existing agreements and treaties? Yes.
Will it solve all the problems? No.
But it does show that we are serious now about fair trade policies, and the chinese need to adjust, let their Yuan begin to float again, hopefully this time faster, and try and equalize things, before all of our industry is destroyed, and there is nothing left here.
THAT's what this is about.
Not health care support form Unions. Obama already has that.
This is about no less than trying to ensure fair trading practices, and allowing U.S. industry some time to adjust to the massive growth in imported Chinese tires.
. I can't decide how much time I really want to spend on making sure my tires are made in the USA by union members.
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