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Letter to the Honorable Gary Locke, U.S. Secretary of Commerce and the Honorable Ron Kirk, U.S. Trade Representative

Hon. Gary Locke,
U.S. Secretary of Commerce, Constitution Ave., NW., Washington, DC.
Hon. RON KIRK,
U.S. Trade Representative, 600 17th Street, NW.,
Washington, DC.

DEAR SECRETARY LOCKE AND AMBASSADOR KIRK: We are writing to express our continued concerns about China's use of a Value-Added Tax (VAT) rebate to promote its soda ash industry at the expense of U.S. exports. For over two years, China has provided its domestic manufacturers with an artificial incentive to export through a 9% rebate of the 17% VAT. For a number of reasons, we ask that the issue of the soda ash VAT rebate be specifically included on the JCCT agenda this fall.

After suspending its VAT rebate for soda ash in July 2007, China reinstated the soda ash rebate in April 2009 to encourage its own exports during the global economic crisis. China's state-supported soda ash industry is the largest in the world and this policy is harmful to its international competitors, particularly U.S. soda ash manufacturers. As you may know, U.S. soda ash has a natural advantage over Chinese soda ash, based on a manufacturing process that is much more sustainable in terms of environmental protection and energy use than the synthetic processes used in China. China's manipulation of the VAT rebate to support its domestic soda ash industry also has wider implications--not only is it economically unjustified, it contravenes China's own interests in shifting energy resources from more productive and efficient industries.

We must focus on Chinese policies that are a direct threat to U.S. exports and U.S. jobs. The soda ash VAT rebate is one such policy. Chinese exports compete directly with U.S. soda ash exports in the Asia-Pacific market and beyond. Although the VAT is just one part of China's overall industrial policy, the soda ash VAT rebate is a distinct threat to U.S. manufacturing in a sector where the United States enjoys a natural competitive advantage. If we don't stand up for the pillars of our export-based manufacturers like the soda ash industry--and the U.S. workers employed throughout the soda ash supply chain--we cannot seriously contend we are doing everything we can to support U.S. exports.

We ask that the Department of Commerce and the U.S. Trade Representative's Office ensure that the soda ash VAT rebate is raised at the highest levels with Chinese officials at the JCCT meetings this year. The message should be as clear as it is convincing; namely, China should live up to its repeated pledge to discourage the expansion of highly-polluting and energy-intensive sectors such as its own soda ash industry. Policies aimed at promoting soda ash exports, such as the VAT rebate, are inconsistent with China's own stated goals and a direct threat to U.S. interests.

We greatly appreciate your consideration of this request and look forward to your response.

Senator Michael B. Enzi; Senator John Barrasso, M.D.; Representative David Wu; Senator Joseph I. Lieberman; Senator Robert Menendez; Representative Cynthia Lummis; Senator Ron Wyden; Senator Jeff Merkley; Representative James A. Himes; Senator Frank Lautenberg.


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