U.S. export controls have small China trade impact http://www.reuters.com/article/politicsNews/idUSN1542500520070521
Mon May 21, 2007
By Paul Eckert, Asia Correspondent
WASHINGTON (Reuters) - China's frequent call for lifting U.S. export controls to trim trade imbalances -- expected to be repeated at high-level economic talks this week -- is likely to fall on deaf ears, experts said on Monday.
The request to remove U.S. curbs on exports to China of high-technology items that have military uses has long been a talking point of Chinese Vice-premier Wu Yi, head of China's delegation for the two-day "strategic economic dialogue."
Wu's call resonates with some U.S. business groups, who fear lost sales to competitors and want the controls streamlined. But few U.S. observers believe that removing controls would even dent a U.S. deficit with China that hit a record $233 billion in 2006.
"I don't think that U.S. export controls are a significant inhibitor of exports that would change the trade balance in any way," said John Frisbie, president of the U.S.-China Business Council, a Washington group that promotes trade.
The U.S. Commerce Department, which handles the export licenses, says 45 of the 1,423 license applications for exports to China it received in 2006 were rejected, with a value of $17.7 million.
Of $55.2 billion in U.S. exports to China in 2006, $308 million required a license, while $231 million of the roughly $18 billion in American high-technology exports to China required such permits, department data showed.
"Double that number and you still have a $230 billion deficit," said economist Peter Morici of the University of Maryland business school near Washington.
Morici, a strong critic of Chinese trade practices, said Beijing officials who link export controls to the trade imbalance are "obfuscating and trying to distract from the issue so they won't have to come to terms with the true American complaint" about Chinese currency and trade barriers.
Beijing's official media have labeled the export controls an "unfair trade barrier" that blocks China's access to advanced technology and blunts the U.S. comparative advantage in selling advanced products to China. Frisbie said it was possible but not certain that potential U.S. technology sales to China were lost when would-be buyers switch to European or Japanese suppliers to avoid controls.
U.S. Assistant Secretary of Commerce Christopher Padilla, in a recent speech defending the curbs in light of China's rapid military growth, said there were "more organized efforts to obtain and illegally export controlled U.S. technology to China than to any other country."
Padilla, in charge of export administration, said last week that the Commerce Department hoped to soon launch a new program, now under review, that would facilitate exports to legitimate civilian end-users in China, while expanding curbs on "bad actors."
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