Wednesday, January 28, 2004

I should have been more clear. Not all his proposals are impractical especially 6,7,9 and 10.

The crux of the outsourcing problem lies in two points: 1. Presence of labor intensive markets and 2. Lower costs. These two are inevitable realities and the US can compete only on costs. No currency pressures or fair trade agreements can stop the phenomenon. He is attributing this state to unfair trade practices which is only partly true. His solutions, except points 6,7,9 and 10 don't address the root cause i.e. higher costs and inefficiency of US manufacturers.

About utilizing the special safeguard wrt to China, I believe it has been invoked. But what is a safeguard? According to a Commerce Department Press Release,

"Safeguards are temporary and selective measures such as increased tariffs, tariff quotas, or quantitative restrictions explicitly designed to slow imports in order to enable a particular domestic industry to adjust to heightened competition from foreign suppliers. A special provision of China's World Trade Organization (WTO) accession agreement provides the authority for WTO members to impose temporary quotas on textile imports from China in the event those imports are found to cause "market disruption."..."Once a WTO member has invoked the textile safeguard, it must "pursue a negotiated resolution of the matter with the Chinese government," according to the press release.

- which has been happening. The key word here is 'temporary'.

... I will complete this later tonight.


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