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Thursday, November 15, 2007

China's Restrictions on US Imports

Interesting article in the NY Times on China's restrictions on US imports. Restrictions on imports has been a staple of many countries so they can protect their domestic industries and build them up. Historically this has been done with tariffs, but with the WTO that supports the General Agreement on Tariffs and Trade (typically abbreviated GATT) that has resulted in a decrease in tarrifs as well as empowering countries to take others to court (WTO). So protectionism has become a bit more careful... China recently started requiring inspections of medical equipment imported from abroad. This is one sector the US has been doing well in. The result of this is to favor domestic suppliers. Same thing is happening in Cell Phones and other standards. For example with the DVD standard, all DVD Players and even disks need to pay a royalty fee to the various patent holders (all non-Chinese Companies). So if China can develop their own standard, it helps local industries. Economist has some great articles on China's economy, their technology development challenges, and intellectual property issues.

All of the above is probably a bit confusing. Simply - China wants to move up the food chain of value in producing goods. Another Economist article mentioned how little of the pie China gets for the iPod, where all the real margin goes to companies outside China even though it is assembled in China.

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