Facing Protectionism Generated by Trade Disputes: China's Post-WTO Blues

32 Pages Posted: 13 Jan 2008 Last revised: 28 Jan 2008

See all articles by Wing Thye Woo

Wing Thye Woo

The Brookings Institution

Geng Xiao

The Brookings Institution

Date Written: November 2007

Abstract

In present-day political and policy discussions in Washington, widespread concern is shared over the large and growing U.S.-China trade deficit. In the Senate, this concern was manifested in the proposed Currency Exchange Rate Oversight Reform Act of 2007, which was introduced in June 2007, and calls for designations and escalations to punish countries deemed to be guilty of exchange rate manipulation. Many other proposals to adjust, control or limit various elements of the U.S.-China trade relationship also exist, underscoring the belief that the U.S. economy suffers in some way from this trade relationship. More specifically, at the very base of these concerns lies the view that the large trade deficit has reduced U.S. welfare by increasing unemployment and reducing wages. Yet is this an accurate representation of the affect of current trade patterns with China on the U.S. economy?

In order to determine the answer, in this paper we examine some of the economic issues associated with the large overall U.S. trade deficit (which, in 2006, was three and a half times larger than the bilateral U.S.-China trade deficit), and some of policy options in reducing U.S.-China economic tensions by posing and answering four critical questions.

Keywords: trade, World Trade Organization, China, Chinese economy

Suggested Citation

Woo, Wing Thye and Xiao, Geng, Facing Protectionism Generated by Trade Disputes: China's Post-WTO Blues (November 2007). Brookings Global Economy and Development Working Paper No. 13, Available at SSRN: https://ssrn.com/abstract=1082905 or http://dx.doi.org/10.2139/ssrn.1082905

Wing Thye Woo (Contact Author)

The Brookings Institution ( email )

1775 Massachusetts Ave., NW
Washington, DC 20036
United States

HOME PAGE: http://www.brookings.edu/experts/woow.aspx

Geng Xiao

The Brookings Institution ( email )

1775 Massachusetts Ave., NW
Washington, DC 20036
United States

HOME PAGE: http://www.brookings.edu/experts/xiaog.aspx