A wide-ranging confrontation with Beijing over trade could carry serious risks, given the still-troubled state of the economy, analysts said. China not only is the nation's second-biggest trading partner, after Canada, but it also holds many billions of dollars in U.S. government bonds. If relations turned sour and Beijing decided to unload those securities, the U.S. economy could suffer significant harm.
The Obama administration tried to press the raw-material issue directly with China, as the Bush administration did, but quickly opted to file a complaint when it became clear that would not work, Vargo said.
Kirk said the U.S. decided to act after talks during the last two years failed to lead to the removal of the export restrictions.
Those talks were largely conducted by the Bush administration, which had decided not to file a formal complaint with the WTO, which governs global trade among member nations. Since China joined the WTO in 2001, Washington has filed seven cases against Beijing. China has filed four cases against the U.S.
Ensuring that countries do not impose unfair trade practices, Kirk said, is crucial as the U.S. tries to emerge from a severe recession.
"Now more than ever, trade is essential to keeping America's economy afloat," he said.
Kirk cited coke as an example of the effect of China's trade practices.
In 2008, China was the world's leading producer of the coal derivative, with 336 million metric tons. But export duties that reached 40% limited China's annual exports to 12 million metric tons, pushing the world price for coke in August 2008 to $740 a metric ton, Kirk said. In China, the price was $472 a metric ton.
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don.lee@latimes.com
jim.puzzanghera@latimes.com
Times staff writer David Pierson in Beijing and Tommy Yang in The Times' Beijing bureau contributed to this report.
