Labor Involved US-China Trade Relations

By Yu, Hanqian | International Management Review, January 1, 2007 | Go to article overview

Labor Involved US-China Trade Relations


Yu, Hanqian, International Management Review


[Abstract]

With more frequent trade between the U.S. and China, laborers' situation and rights in China cause increased friction in trading. Behind this friction are a lot of elements including American domestic political and economic policy, Chinese political strategy, the idea of human rights, and so on. The solution to the problems depends on developing an understanding between the two countries. And to China, it's very important to develop its labor law institutions and firmly protect laborers' rights lest the U.S. reject its products with the excuse of labor problems.

[Keywords] Labor problem; trade; employment; free trade; labor law

Labor Problems in US-China Trade Frictions

In 2003, the bilateral trade volume between the U.S. and China reached $126.33 billion, and China's export surplus with the U.S. climbed to $58.6 billion. China became the third largest trade partner with the U.S. (Miao, 2004). In 2004, the trade volume continuously climbed to $169.63 billion, increasing by 34.3%, and China export surplus with the U.S. was $80.27 billion (Ministry of Commerce, 2005). As to U.S statistics, the Chinese trade deficit has been ranked at the top of list, exceeding the Japanese trade deficit since 2001 (US Census Bureau, 2004). The deficit statistics from 2001 to 2004 are respectively $90.2 billion, $111.4 billion, $134.9 billion, and $175.8 billion, which are of increasing concern by the U.S. government and people in the last two years (US-China Business Council).

From the perspective of ordinary people, deficit always means the wealth flows out off the country. During the Bush Administration, the American economy and national security have been faced big challenges. Economic depression and increasing unemployment are making Americans more and more anxious. In this situation, China began to be the target. On March 19th, 2004, the most influential trade union in U.S., the AFL-CIO, filed an unprecedented petition under Section 301 of the Trade Act of 1974 demanding that President Bush and the U.S. Trade Representative pressure the Chinese government for engaging in unreasonable trade practices by their violations of workers' rights. This is the most official action for the AFL-CIO to take against Chinese imports to protect domestic employment, which upgraded the event of U.S. trade deficit with China to a height of politics and human rights. Although President Bush rejected the petition, it illustrated to some extent the hatred some American workers have against Chinese imports. This hatred is one more negative factor to Chinese imports and U. S. -China trade relations.

Opinions from U.S. Society

International free trade is based on the economic theory of comparative advantages, so most economists advocate it and think it benefits world economy in the long run. But in the short term, international trade is a double-edge sword. It can spur economic development as well as cause domestic labor problem, such as wage decreases and unemployment. That is why some people intensely protest against globalization and WTO. Similarly, U.S. domestic society consists of various voices representing different groups' interests.

Opinions for Employment

In January 2005, the Economic Policy Institute released a report titled "US-China Trade, 1998-2003, Impact on jobs and industries, nationally and state-by-state; A Research Report Prepared for the US-China Economic and Security Review Commission," written by Dr. Robert E. Scott. The report says: The rise in the United States' trade deficit with China between 1989 and 2003 caused the displacement of production that supported 1.5 million U.S. jobs. Some of those jobs were related to production or services that ceased or moved elsewhere; others are jobs in supplying industries. These jobs reflect the effect on labor demand - in lost job opportunities - in an economy with a worsening balance between exports and imports. Most of those lost opportunities were in the high-wage and job-hemorrhaging manufacturing sector. …

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