China and Free Trade In the international business class, free trade has been the cornerstone of economic prosperity. But sometimes free trade can flood the market with cheaper products, causing financial problems for companies in this country. The American government often sets tariffs to help American companies. But is this the best solution? This is the topic of the article Bush's China-Trade Dilemma by Neil King Jr. published November 14, 2002 in the “Wall Street Journal”. Since China joined the World Trade Organization last year, it has become the third largest supplier of imported goods and services to the United States. Many U.S. companies complain that China is selling the items below cost and want Congress to impose tariffs. They accuse China of violating the free trade agreement signed when it joined the WTO. Trade expert Gary Hufbauer says: “It's only a matter of time before Japan's trade battles happen again, but this time with China.” But many in Washington believe that if the United States files a complaint against China with the WTO, other countries will follow and the WTO system will be overwhelmed with complaints against China. As one US official put it: “I'm not sure anyone wants to be first in line to bash China at the WTO.” Overall, China has a good free trade record and is really making an effort to enter the world economy. But China's success has hurt some American companies and in the United States there has been talk of protectionism. So what does Bush do? The administration praises free trade, but is seriously considering protective tariffs on some items. Is this a contradiction? There is another complication that must be addressed. Many of the companies manufacturing in China are actually American-owned, such as Motorola Inc. How will this affect the Bush administration's actions? Most Chinese companies are backed by foreign investors. China is eliminating trade barriers, cutting import tariffs and easing restrictions on business licenses.