U.S. Government Assists Outsourcing to China


I bring this article to your attention because I could hardly believe what I was reading.  The U.S. government has filed a complaint with the WTO (World Trade Organization), complaining that the EU (European Union) has raised tariffs against Chinese exports of high-tech products.  Why is the U.S. government involved?  Because these products are being made by the Chinese under American brand names like Hewlett Packard.  (Japan has filed a similar complaint against the EU.) 

At first glance, this appears to be a case of America defending its manufacturers against unfair trade practices by the EU.  It isn’t until you get further into the article that these are actually products made in China and shipped directly from China to the EU.  Thus, our government is wasting its time helping the Chinese support their huge trade surplus with Europe and helping American manufacturers with their outsourcing of manufacturing to China. 

The United States and Japan said they were taking action at the World Trade Organization aimed at overturning European Union tariffs on computer screens, multifunctional printers and TV set-top boxes capable of accessing the Internet.

U.S. technology heavyweights such as Hewlett Packard Co (HPQ.N: Quote, Profile, Research) argue that EU tariffs on the products violate the spirit and the letter of the WTO’s Information Technology Agreement (ITA), which eliminated duties on a wide range of high-tech goods beginning in July 1997 to spur trade.

So, up to now, you’re probably cheering the U.S. for having the gumption to stand up to unfair European trade practices, right?  But wait:



U.S. industry officials said the EU imported $11 billion worth of the three products each year.


The goods are manufactured mostly in countries such as China and Malaysia but are based on U.S. design and engineering and sold under U.S. brand names.


Profits from exports of the three goods also return to the United States, Schwab said.

So that’s the real concern – propping up the profits of American companies that have outsourced manufacturing to China.  Frankly, I’m on the side of the EU on this one.  I can’t blame them for imposing tariffs on imports from China to protect their domestic industries.  More power to them.  The EU is using some common sense in setting their trade policies.  If the U.S. had any sense, we’d also impose tariffs on the same products, regardless of whether or not they’re made under “American” brand names. 



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