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House of Reps Also Mull China Currency Bill . . . A day after the Schumer-Graham bill was introduced in the Senate, U.S. Reps. Tim Ryan (D-OH) and Duncan Hunter (R-CA) introduced the "Chinese Currency Act of 2005" (H.R. 1498). The Ryan-Hunter bill would enable U.S. manufacturers who believe they are harmed by the undervalued yuan to seek remedies under the countervailing duty and China-specific market disruption statutes. The countervailing duty law permits the collection of customs duties on imports found to benefit from subsidies provided by foreign governments. The China-specific market disruption statute authorizes imposition of tariffs, quotas and other restrictions to address surges of Chinese imports found to disrupt U.S. markets. Both mechanisms are permitted under the World Trade Organization (WTO) principles. Touted as consistent with WTO rules, H.R. 1498 defines "exchange-rate manipulation" as an unfair trade practice that constitutes a prohibited export subsidy, and therefore, the type of subsidy that the United States can impose off-setting duties. The bill also identifies "exchange-rate manipulation" as the grounds for providing relief to U.S. industries claiming injury from import surges of Chinese products. When introduced, Congressmen Ryan and Hunter noted that the bill was endorsed by the China Currency Coalition, a group of U.S. manufacturing associations that have been working to reform China's currency practice. Just last week, the Domestic Manufacturing Group, a group of small and medium-sized companies within the National Association of Manufacturers (NAM), sent a letter to NAM President John Engler urging the association to support H.R. 1498. The letter, endorsed by 44 companies, stated that "NAM has already endorsed H.R. 1216 and S.593 that clarifies that U.S. CVD law is applicable to non-market economies. H.R. 1498 is complementary to this legislation, supportive of the 2005 NAM trade policies, and fully consistent with U.S. obligations under the WTO - and it is the kind of trade enforcement action for which the DMG has been asking. We believe the NAM should enthusiastically and immediately support this vital legislation." To learn more about the China currency issue, contact Karen Bland Toliver, Senior Director, International Trade and Industry Statistics, (202) 974-5333; e-mail ktoliver@socplas.org.
Congressional China Currency Action Coalition Re-files Petition . . . On April 20, thirty-five House and Senate members filed a "Section 301" petition with USTR requesting that it initiate a formal WTO dispute settlement proceeding against China's currency practice. The petition is very similar to the petitions filed in September 2004 by industry and labor groups, which USTR twice rejected. The congressional petition reiterates the legal grounds for WTO action and contains updated trade data. It calls for USTR to immediately file a formal WTO complaint against China, and urges WTO-consistent remedies if the U.S. wins and China does not reform its practice. Trade press reports that the lawmakers filed the petition in hopes that increasing congressional attention on the matter would put more pressure on USTR to take some action.
Administration Takes Tougher Stance on China Currency Practices . . . President Bush and Treasury Secretary John W. Snow recently made statements indicating that China reforms its exchange-rate system. During an interview with CNBC, Bush said that China should now move toward a market-based exchange rate system. The, before the House Financial Services Committee, Secretary Snow stated, "Reform of the currency exchange regime in China is one of the highest priorities for our international economic policy . . . The Chinese are now ready to adopt a more flexible exchange rate, they have sufficiently prepared their financial system to live in a world of greater flexibility and need to take action now." Snow reiterated this position in comments after the recent meeting of the G-7 Finance Ministers. Although no specific time-line has been proposed for China to change its currency practices, these recent public statements indicate a shift in the Administration's position to a more urgent and aggressive posture in dealing with the Chinese government on this matter. USTR Completes Review of China's IP Rights System . . . The Office of the U.S. Trade Representative (USTR) April 29 released its annual "Special 301" report which examines the adequacy and effectiveness of intellectual property rights protection of U.S. trading partners. It also released the results of its "out-of-cycle" review of China, finding that "infringement levels remain unacceptably high throughout China, in spite of Beijing's efforts to reduce them." As a result of these findings, USTR placed China on its "Priority Watch List," which subjects China to stricter scrutiny, and possibly a formal WTO action for its failure to comply with intellectual property protections called for by the WTO. USTR stated that it will "work with U.S. industry and other stakeholders with an eye toward utilizing WTO procedures to bring China in compliance with its [WTO] obligations." A copy of USTR's report is available online at www.ustr.gov. The release of USTR's report comes in the wake of intensified calls from industry groups and members of the House and Senate pressing USTR to file a formal WTO complaint against China for its lax enforcement against counterfeiting and pirating of U.S. goods. SPI has joined groups such as NAM and others, urging the Administration to consider filing a case based on the results of USTR's review. SPI Calls for Member Input . . . As is evidenced by this special global trade update, SPI is currently working on a number of trade issues that are critical to U.S. plastics manufacturers. We are specifically seeking information on the following issues:
For more information about SPI Link, mailing list additions/deletions, or to receive the publication by e-mail, contact Paula Weis, (202) 974-5282; e-mail pweis@socplas.org. More About SPI: Vision and Mission . Membership . Business Units . Regional Offices . News and Publications . Calendar of Events . Terms and Conditions of Use |
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China Currency Actions in the Senate . . . Congressional activity on international trade policy matters has intensified during the past few weeks as lawmakers respond to their constituents' calls for legislative action to deal with the China currency issue. On April 6, Sens. Chuck Schumer (D-NY) and Lindsey Graham (R-SC) introduced a bill to impose punitive tariffs of 27.5 percent on Chinese imports into the U.S. market. Introduced as an amendment to the State Department Authorization Bill (S. 600), the Schumer-Graham bill would give the Bush Administration six months to persuade China to significantly increase the value of the yuan. By a vote of 67-33, a motion to table the bill was defeated. However, the Senate leadership later struck a deal with Schumer to hold a hearing before the August recess to vote on the measure as a stand alone bill. The Schumer-Graham bill is widely opposed and viewed as a blatant violation of WTO rules prohibiting unilateral tariffs, and, many do not anticipate that the bill will have sufficient support for passage into law. Nonetheless, some policymakers believe the bipartisan bill sends a strong signal to the Administration that lawmakers on the Hill are growing increasingly frustrated with China's failure to reform its exchange-rate system. Senate Finance Committee Chairman Charles Grassley (R-IA) has asked his staff to develop a comprehensive China trade bill as an alternative to the Schumer-Graham bill. 
House Ways and Means Committee Holds Hearing on U.S.-China Economic Relations . . . During an April 14, hearing on U.S.-China Economic Relations, House Ways and Means Committee Chairman Bill Thomas (R-CA) noted that "China's growth, as you might expect, has led to friction and calls for diligent compliance monitoring and other causes." Representatives from the Congressional Budget Office and the Council of Economic Advisors testified about China's economic performance, the relationship between the yuan and the U.S. trade deficit, China's role on oil prices and other economic issues. "Much popular attention has been focused on the role of the dollar/yuan exchange rate in determining the volume of trade flows. However, China's exchange rate policy has only a modest influence on the overall trade deficit and, in turn, on the current-account deficit," said Douglas Holtz-Eakin, Director of the Congressional Budget Office. During the hearing, a representative from the Office of the U.S. Trade Representative (USTR) discussed China's compliance with its WTO obligations and the Administration's efforts to improve China's compliance record. The Ways and Means Committee also heard from industry representatives from the U.S. Chamber of Commerce, Federal Express and Fisher-Baron, Inc., a NAM member and small manufacturer of machine components. The written statements of all individuals testifying before the Ways and Means Committee is available on the U.S. House of Representatives Web site at 
SPI Comments on U.S.-China Economic Relations to House Ways and Means Committee . . . In addition to witness testimony, the House Ways and Means Committee permitted other interested parties to submit written statements for the hearing record. SPI submitted comments noting that "we are concerned that the mutually beneficial relationship between the United States and China is increasingly becoming one-sided to the detriment of U.S. manufacturers and workers." SPI identified China's currency manipulation, lax protection of intellectual property rights and high tariffs on plastics product imports into China as areas of concern. SPI also called for strict enforcement of U.S. trade laws to combat unfair trade practices and joined NAM's support for legislation that would apply the countervailing statute to China. SPI noted that "our members have stepped up to the challenge of globalization by continuing to innovate and further increase productivity to compete in the global marketplace. They do not want or need protectionist measures but believe strongly that all U.S. trading partners, and particularly, China, must be held accountable for their international trade commitments." Read the full text of the comments online at 
House Energy and Commerce Committee Holds Hearing on CAFTA-DR . . . The House Subcommittee on Commerce, Trade and Consumer Protection last week held a hearing on the U.S. Central American and Dominican Republic Free Trade Agreement (CAFTA-DR). This agreement, which covers the Dominican Republic, Costa Rica, El Salvador, Guatemala, Honduras and Nicaragua, was concluded last year and awaits congressional approval. Passage of CAFTA-DR is one of President Bush's top priorities, but the U.S. sugar industry and other groups strongly oppose the agreement, putting congressional passage in jeopardy. The Bush Administration touts CAFTA-DR as leveling the playing field for U.S. manufactured goods in the region, noting that 80 percent of goods from CAFTA-DR countries already receive duty-free entry into the U.S. market under preferential trade programs for the region. Largely for this reason, NAM fully supports the agreement as good for U.S. manufacturers. During the hearing, NAM's Vice President for International Economic Affairs Frank Vargo, noted that "the total impact of CAFTA-DR on U.S. exports could be as much as $5 billion and 60,000 related American jobs." He described that agreement as "an unambiguous winner for U.S. manufacturing." No date has been set for a Congressional vote on the agreement, but there are signals that the vote will take place before the August recess. SPI is still closely examining the CAFTA-DR provisions to evaluate the agreement's impact on the plastics industry. With respect to U.S. plastic exports, the agreement would eliminate tariffs on a variety of polymers and plastic products. Tariffs on plastic bags, pipes and fittings would be reduced over a ten year period. Watch for updates in SPI Link in the coming months. 
Portman Confirmed as U.S. Trade Representative . . . The Senate April 29 voted to confirm Congressman Robert Portman as the next U.S. Trade Representative. Portman, who served in the U.S. House of Representative representing Ohio's Second district, is well-respected by members of both parties. His nomination was stalled early on by a hold placed by Sen. Evan Bayh (D-OH) to force a vote on the Stopping Overseas Subsidies Act (SOSA). SOSA is a bipartisan bill endorsed by 50 other lawmakers from both parties, NAM and 21 other industry groups, that would direct the Commerce Department to apply the countervailing duty statute to countries, such as China, that are designated as non-market economies under U.S. trade law. Bayh lifted the hold upon receiving a commitment from Senate Finance Committee Chair Charles Grassley to include consideration of SOSA in a Finance Committee hearing before the August recess. Portman conveyed his commitment to getting tough on China trade issues, including an examination of Chinese subsidy practices, and also pledged to meeting with Ohio manufacturers and workers who claim to suffer injury from unfair trade practices.