First, refreshing candor from President Clinton's trade negotiator:

It is rare when a government official actually blames himself for his mistakes. That straight talk occurred in the June 4 issue of Foreign Policy in Focus when Robert Cassidy, President Clinton's Assistant U.S. Trade Representative for Asia and China, took himself to task for the trade agreement he negotiated with China. [...]

If you add the two manipulations mentioned by Cassidy together, the approximately 40% added by Chinese tariffs and value-added taxes and the approximately 40% added by Chinese currency manipulations, you find that American exports face the equivalent of an 80% tariff when being sold in China while Chinese exports to the United States face no tariff and get a 40% currency-manipulation subsidy from the Chinese government. With our trade deficit with China rising from $229 billion in 2006 to $252 billion in 2007, is it any wonder that American manufacturers are laying off workers?

And from where do these subsidies originate? Do Communist Party officials forgo their fourth or fifth house or luxury cars? Does the Red Army decide not to fund their semi-annual military exercises in Taiwan's front yard?

No, they are primarily extracted from Chinese workers, of course.

But the central point here is: usually, when one nation engages in "trade warfare" by slapping tariffs on another's exports, the other typically responds in kind (if they have any political or economic clout) until the practice stops. In this case, the admission is that the Clinton administration simply gave away the shop, handing China MFN (Most Favored Nation) status without any push for improved human rights nor meaningful guarantees protecting two-way free trade.

(Not that Bush or McCain come off much better, mind you.)

Second, from the Christian Science Monitor, more Chinese subsidies -- this time on oil:

In China, the government caps gas prices. Drivers there pay about half of what Americans pay. In many countries, oil prices are held artificially low, either by fiat or subsidy. The result? Consumption keeps rising, boosting global prices. The rest of the world – the part now racing to conserve – ends up paying more than it should. [...]

Added together, it means that Chinese industries receive a double or triple subsidy. Quadruple, if count the fact that China has vast amounts of forced labor.

I'm generally an advocate of free trade, but there are situations where trade is not "free" in the slightest. When governments lower prices artificially, you're not letting capital or labor go where it does the most good -- to the contrary, you're inflicting economic harm. And of course, human rights issues aside, forced labor is also a kind of economic subsidy: one which, as an American, I'd gladly forgo higher prices to avoid rewarding.

[Steven] Mosher pointed out that China's Mao Zedong did something that the dictator Stalin was never able to accomplish in the former Soviet Union -- he actually made communist labor camps turn a profit. The workers are paid little because of their prisoner status, Mosher said, and many of their products are exported to the United States. "American workers are competing with literally slave labor," Mosher added.

It's a shame we don't use threats of cutting off access to our markets as an incentive to encourage improvement in China.