A Blow for Free Trade and Jobs

The Ohio factory worker who lost a job to a low-wage factory in China probably won't see that job return. But if a trade deal struck on Wednesday between China and the United States actually works, other jobs may soon be created in the US.

In the agreement, China agreed to allow US firms to distribute their goods to Chinese stores without going through state-run enterprises. It also promised to launch a new crackdown on copyright pirates, who cost the US industry in CDs, movies, and software more than $2 billion a year. (China is the world's largest copyright scofflaw.)

China also will reduce more barriers to food exports while US express-delivery firms will have more freedom to operate in China. And US exporters of computers and mobile phones won't face a potential trade barrier that China had proposed for June 1.

All this is a blow to protectionists who prefer to limit China's imports rather than further opening the huge Chinese market to competitive US exports. Last fall, Beijing promised to "basically balance" trade with the US - the trade deficit with China hit a record $124 billion last year - and step by step it's making its companies more vulnerable to market forces.

It still needs to loosen the reins on its overvalued currency, for its own sake in preventing inflation but also to raise prices on exports. And Beijing needs to show more follow-through in implementing trade deals.

But unlike Japan in the 1980s, China knows it can't afford to keep foreigners out. In 2002, it replaced the United States as the world's No. 1 destination for foreign direct investment. Perhaps it can also soon be the top destination for US exports.

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