Commentary

U.S. Challenge to Chinese Export Subsidies Hypocritical

The U.S. recently launched a challenge to China with the World Trade Organization, arguing that it is actively subsidizing exports to protect domestic industries. This is more than a bit hypocritical, as the American Entrprise Institute‘s Philip Levy recently pointed out, when the U.S. is dumping billions of dollars into domestic companies through guarantees and subsidies. As Levy writes,

“The Obama Administration last week launched a complaint against China for effectively subsidizing its producers. While China’s policies do look like subsidies, the United States has been embracing massive subsidies of its own. To provide leadership for the global trading system, the United States needs to practice what it preaches.”

By launching its own aggressive industrial policy subsidies favored quarters of U.S. industry, the U.S. has lost any moral authority for challenging other nation’s for abrogating free trade principles even though it may still have the legal ability to purse these challenges.

Samuel R. Staley, Ph.D. is a senior research fellow at Reason Foundation and managing director of the DeVoe L. Moore Center at Florida State University in Tallahassee where he teaches graduate and undergraduate courses in urban planning, regulation, and urban economics. Prior to joining Florida State, Staley was director of urban growth and land-use policy for Reason Foundation where he helped establish its urban policy program in 1997.