Gore's fair-trade ideas could put China in firing line

Vice-President Al Gore's thoughts on free trade are hardly proving a hot election issue as he campaigns across the church pulpits, school yards and machine shops of ordinary America.

But with each passing week a small band of trade analysts and diplomats in Washington are increasingly fearful that China could prove a battleground should he win and start putting flesh on the bones of his 'free-and-fair' trade ideas.

A series of seemingly unrelated events over the past week have given them fresh cause for a second glance.

Robert Byrd, one of the toughest veterans of the US Senate, slipped a highly protectionist provision into an agriculture spending bill as Congress mopped up its business for the year.

His move has the potential to overturn the way the United States administers anti-dumping enforcement. Anti-dumping, any free trader will tell you, is a bureaucratic nightmare that has long sparked rows between many in the region and the US.

In short, World Trade Organisation rules allow a country to slap on punitive tariffs if it feels a domestic industry is being harmed by cheap imports 'dumped' for less than they can be produced. The foreign industry involved gets its nose out of joint, long and costly proceedings begin and all the while free trade is blocked.

Stop and think why anyone would sell something for less than it costs to make, grow or catch, and you get to the heart of why anti-dumping cases can be very easy to allege and very hard to prove. Whether it is Japanese steel putting Pittsburgh metal workers on the scrap-heap or Guangdong craw-fish turning up in New Orleans' famous gumbo stews.

What Mr Byrd has managed, with considerable legislative stealth garnered through 42 years representing West Virginia, is a provision that gives the domestic industry involved the fruits of the penalty tariffs. At present the money - about US$200 million a year - goes into central government coffers.

Mr Byrd has given domestic industry a potentially lucrative new excuse to cry 'dumping' at the drop of a hat.

Not surprisingly, the Europeans and the Japanese have been quick to cry foul, knowing many of their products stand to be victims. The Clinton Administration agrees that the provision is wrong under international norms.

Normally, President Bill Clinton would swiftly apply his veto power and the matter would quietly end. Mr Byrd, a loyal Democrat, would be able to tell his voters: 'At least I gave it a shot'.

Not this time. In two weeks, Americans go to the polls to decide if they want Mr Gore to replace Mr Clinton, a major boost to 'Slick Willie's' troubled legacy.

West Virginia, with its well-organised steel workers, is a small but important pocket of votes in a swing state that could be very important in the closest race for the White House in 40 years.

Surprise, surprise, no veto is expected. Instead, the administration is hoping for some sort of fresh amendment, maybe once Congress returns next year.

The quandary in which the administration finds itself seems tricky for even its finest spin-doctors. In a recent speech in Washington, Mr Clinton's Trade Representative Charlene Barshefsky did little to clarify matters in the following exchange:

Ms Barshefsky: 'This is an amendment that the administration opposed and continues to oppose. It is an amendment that would essentially give damages to the affected industry because of dumping or because of subsidies. I won't go into the reasons why it's a bad idea, but it is. And that's where we are: in opposition.'

Question: 'Well, is it my understanding that the administration is likely nonetheless to sign spending measures which include the Byrd amendment?'

Ms Barshefsky: 'Obviously, the president is going to weigh all sorts of competing priorities, but that does not alter our general opposition to the provision.'

Mr Gore, for his part, spent the weekend urging America's vast union organisations to 'get out the vote', doing little to discourage fears among some trade envoys that he may face some fierce debts to organised labour should he win.

The fears suggest he may face strong pressures to act tough and protect domestic industries should he face an economic downturn in office.

The president has sweeping powers on trade issues, with the trade representative under direct White House control.

China is hugely exposed to anti-dumping action given the size and nature of its exports to the US.

In one of its key concessions in the sino-US trade pact as part of its entry into the World Trade Organisation, China agreed to terms which some fear will create future friction.

The US is allowed to class China as a non-market economy for the next 15 years in any calculations to determine whether dumping is taking place.

'Let's hope the sly manoeuvrings we have seen over the last week are not a sign of things to come,' said one trade lawyer with long experience of taking on the US on behalf of Asian exporters.

'It is too much to ask for leadership during election time?'