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Making China Play by Fair Trade Rules

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Making China Play by Fair Trade Rules
August 5, 2005

Recently, the U.S. House of Representatives passed legislation cracking down on unfair Chinese trade policies. The United States Trade Rights Enforcement Act corrects a serious imbalance by closing a loophole in U.S. trade law.

Currently, U.S. employers are unable to use U.S. trade laws to level the playing field against governments who subsidize producers in their country. In particular, the Chinese government regularly provides government subsidies to its companies, providing them an unfair advantage as they compete with American companies that do not receive such aid. U.S. companies cannot bring countervailing duty cases against companies whose products are being subsidized by non-market countries such as China. However, they can bring countervailing duty cases against companies in market-based economies.

This bill gives real tools for U.S. manufacturers and farmers to counter illegal Chinese subsidies, and it ensures Chinese exporters can no longer illegally skip out on paying duties. It is common for new shippers to post bond, instead of cash, as collateral for the amount of duties that they will owe to customs. Yet when the final bill is sent, they evade paying the duties by dissolving their company. This legislation ends this practice by forcing all shippers to pay cash on delivery so they can't close shop when the final bill arrives.

In addition, this bill establishes mechanisms to extensively monitor and enforce Chinese compliance with international trading rules by giving the United States Trade Representative a trade enforcement officer to solely focus on combating unfair and illegal trading practices by our trading partners.

The legislation also requires the Treasury Department to investigate Chinese currency manipulation. Recently, a positive announcement came from the Chinese government that it has developed a mechanism to move its currency closer to a market-based representation of its value, instead of unfairly pegging it to the U.S. dollar.

It is essential that we provide American companies the necessary tools needed to challenge unfairly subsidized products, combat counterfeit goods and intellectual property theft, and hold countries accountable for a transparent currency regime. The United States Trade Rights Enforcement Act is a comprehensive solution that will end many years of inequity in our trade relationship with China.

We can no longer afford to stand by as China manipulates trade laws and its currency.
I will continue to review our trade agreements to determine if they guard against unfair trading practices and ensure they do not have a negative impact on our level of competitiveness. Free trade is good for American workers and consumers so long as it is conducted fairly. Rest assured I will continue to work to ensure that our companies here in the U.S. are equipped to better compete in the global marketplace.

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