From the Post: the Auto Parts Industry Struggle in China and the US

This morning's Washington Post detailed the recent struggle between the United States and China over the auto parts industry in this article titled 'Why It Matters.' The US has accused China of subsidizing its auto-parts, many of which are headed to the United States after production. China, in turn, placed duties on American exports that it says violate international dumping laws. Why, indeed, does it matter?

The subsidized cost of the auto industry exports by each of these countries has faced increased attention in the past few weeks due to the rising tension in the American elections. These subsidies prevent jobs in each of the home countries by eliminating the possibility for competition, and given the continuing state of unemployment in the United States, the issue has become a hot topic for American voters. 

More important than its effect on the election, however, is the effect on globalization of these subsidies. Are the cuts a necessary means of protectionism or a violation of the WTO's free trade laws? The WTO is faced with answering that question, but Joseph Stiglitz offers his own perspective on these nontariff barriers by insisting that America uses a "double standard…for ascertaining predatory pricing" internationally (93). Stiglitz suggests instead that "there should be a single standard for unfair trade practices" (93). 

The argument is reminiscent of the controversial subsidies the United States places on agriculture. In order to support the domestic market, the US offers enormous subsidies to its farmers, yet the move inhibits international competitors from remaining in the market. This eventually hurts the American consumer. If operating on a fair trade basis, these agriculture subsidies should be reduced despite their potential harm to the American agriculture industry. And if the issue in the auto industry is truly reminiscent of the agriculture trade, perhaps the US should reconsider whether its subsidies do more harm than good in preventing the promotion of both free and fair trade.