"A Free-Trade Counterattack"

Just when a citizen despairs of Congress ever doing anything sane again, it surprises. A few weeks ago, America’s representatives and senators frightened all with the protectionist Schumer-Graham bill [Charles Schumer (D-NY) and Lindsey Graham (R-SC)]. Now Congress has turned away from such dangerous legislation to a more welcome, bipartisan, pro-trade reform bill. Titled the United States Trade Enhancement Act of 2006 and co-sponsored by the Republican chairman of the Senate Finance Committee, Chuck Grassley of Iowa, and the committee’s ranking Democrat, Senator Max Baucus of Montana, this bill would work with the World Trade Organization (WTO) and seek reform at the International Monetary Fund (IMF) to correct the kinds of trade abuses of which the United States accuses China of committing. This change in Washington - combined with signs of a softening in Beijing’s trade posture - should do much to reduce trade tensions with China, though among the issues at stake sudden currency adjustments are unlikely and the huge trade imbalance will likely persist for the foreseeable future. In this week’s column, “A Free-Trade Counterattack,” Milton Ezrati writes about the positive developments in Sino-American trade relations. His observations include:- The Grassley-Baucus bill seeks to reform the IMF by strengthening its stance on currency manipulation.- China’s full ascension into the WTO in 2007 will force it to make major changes in the way it conducts policy decisions, including currency intervention.- China is moving toward reform, although admittedly slowly. Progress, however, is underway: Recently, the leaders of China developed a Five-Year Plan that aims to channel domestic growth in the direction of consumption. FULL ARTICLE