Raymond Richman - Jesse Richman - Howard Richman
Richmans' Trade and Taxes Blog
GM caves to demand that it give China its electric car technology
On September 16, the Wall Street Journal reported (Road Gets Bumpy for GM in China) that the Chinese government was pressuring GM to give away its proprietary electric car technology as a condition for exporting its electric cars to China. Here's a selection:
But vehicles produced in the U.S. and sold in China must pay about 65% in visible and hidden tariffs (the approximately 40% hidden tariff is the result of currency-manipulations) while vehicles produced in China and sold in the U.S. pay no duties whatsoever while receiving a hidden currency-manipulation subsidy from the Chinese government. Economists call it "unilateral free trade," a synonym for "trading away one's future."
Less than one week later, the NY Times reported on September 22 (GM to develop electric cars with Chinese automaker) that GM has acceded to the Chinese government's demands:
Back in 2009, Bloomberg reported (GM Set for Harder Life in China as Partner SAIC adds models) that SAIC is already using GM's technology to produce cars for the Chinese market. Thus, it is clear that GM has caved in to the Chinese government's demand that it give away much of its proprietary electric car technology.
The United States does not have to engage in unilateral free trade. Under WTO rules, trade deficit countries such as the U.S. could impose a scaled tariff to balance trade. Such a tariff would be proportional to our trade deficit with each country, but would not be applied to countries like Brazil and Canada with whom the U.S. has balanced trade or a trade surplus.
Unilateral free trade has produced a world in which the Chinese government loots American companies of their proprietary technologies. Balanced trade would produce a world in which American companies could produce in the United States, where they can protect their proprietary technologies, and still have access to the emerging markets.
Comment by M, 9/23/2011:
What you are describing is a controlled demolition of the USA's industrial economy.
The USA allows China to force our Multi-national corporations to share their proprietary technology with their communist state owned "partners". The USA's best companies will compete against a mirror image of themselves. The best and brightest employee's will discover that they must immigrate to find the best job opportunities.
Journal of Economic Literature:
Atlantic Economic Journal: