Sense on Cents

Can we all just get along?

As the global economy continues to struggle, tensions within the international trade arena increase. To wit, today the United States and European Union fired a salvo back at a BRIC nation–none other than our largest creditor, the People’s Republic of China. Bloomberg highlights, E.U, U.S. Complain at WTO Over Chinese Export Curbs:

The European Union and the U.S. complained at the World Trade Organization about Chinese export restrictions on raw materials such as magnesium, their third joint complaint against the Asian nation.

The EU and the U.S. said they filed a request for consultations at the WTO in Geneva today, setting off a period of discussions with China aimed at resolving the dispute. If talks fail, WTO judges can be asked to rule on the issue.

“We are most troubled that it appears this is a conscious policy to subsidize Chinese industry,” U.S. Trade Representative Ron Kirk told journalists in Washington. “China is a leading global producer and exporter of the raw materials in question, and access to these materials is critical for U.S. industrial manufacturers.”

If this complaint were filed in the midst of a strong, robust global economy, one could dismiss it as a ‘one off situation.’ I believe it represents a far more important issue. I view this complaint as another shot in the ongoing ‘serve and volley’ being played out between China and the United States.

To this point, most of the shots have been directed from the BRIC nations toward the United States. While Obama has put forth a few statements to ‘buy American,’ the BRIC nations have aggressively promoted a move away from the U.S. dollar as the international reserve currency.

The crux of the Chinese-U.S. relations continually revolves around a very simple yet complex issue: trust!! (more…)