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Small Business Committee Newsletter Printer Friendly Version
Small Business Committee Notes
Friday, July 21, 2006 Printer Friendly Version
Small Business Committee Notes July 21, 2006 -- Issue 109-51 Phil Eskeland, Policy Director, House Committee on Small Business _______________________________ REA&T and TF&E Joint Subcommittee Hearing on Unfair Chinese Trade Practices On Thursday, July 20, the Subcommittee on Rural Enterprises, Agriculture & Technology (REA&T), chaired by Representative Sam Graves (R-MO), and the Subcommittee on Tax, Finance & Exports (TF&E), chaired by Representative Jeb Bradley (R-NH), held a joint hearing to examine unfair trade practices by the People’s Republic of China. Below are excerpts of the opening remarks of Chairmen Graves and Bradley. Chairman Graves: “Trade with China has grown faster than with any other U.S. trading partner…The growth of the Chinese economy, in particular their exports to the United States, has reached record levels and has created a trade deficits of roughly $202 billion in 2005. Some of the reasons for these discrepancies are as follows. First, since 1994, the Chinese government has kept its currency pegged at 8.2 yuan to the dollar. Many economists estimate that the yuan is undervalued by as much as 40 percent, which means Chinese manufactured goods are 40 percent cheaper than their competitors. Under intense pressure, China announced that it would appreciate the yuan to 8.11 yuan to the dollar, an increase of 2.1 percent, as well as pegging its currency to a basket of currencies rather than only the dollar, on July 21, 2005. While I am not an economist or mathematician, if the yuan was 40 percent undervalued previously, then this slight adjustment still has the currency undervalued by 38 percent. I do appreciate that China has moved slightly by allowing its currency to increase by two percent, but much more needs to be done to level the playing field. China has experienced economic growth, gains in productivity, a large export sector, and increased foreign investment. Their currency manipulation gives their manufacturers an advantage and creates an enormous disadvantage to ours. It’s about time they stop cheating and start playing by the same rules as other countries. Second, theft of intellectual property rights is another significant problem that US companies must take into account when dealing with China. It is estimated that counterfeits constitute between 15 - 20 percent of all products made in China and account for about 8 percent of China’s GDP…Many people believe that it is a victimless crime; unfortunately, Chinese counterfeits or pirated items can impact our safety. More and more often car parts, aircraft parts, and even drugs are being copied. People buy what they believe are legitimate items only to find out later that their purchases were counterfeits. If this trend continues, more people will be harmed by fake medicines, faulty mechanical parts, and even exploding batteries…. While China has passed new laws that provide protection of IPR, it has done little to enforce these laws, allowing for rampant piracy and counterfeiting. China needs to crack down and be an active part of the solution. We need to ensure that US firms compete on a level playing field in the global market and not be at a competitive disadvantage. These unfair barriers not only affect our economy but job growth, much of it fueled by small business, in this country.” Chairman Bradley: “Over the past two decades China has grown into a strong international competitor in the world wide trade market... Trade between the US and China, which totaled only $5 billion just over two decades ago, rose to $285 billion in 2005...Yet, commercial ties between the US and China have been strained by a number of issues, including our surging trade deficit with China, China’s refusal to float its currency, and failure to fully comply with its World Trade Organization (WTO) commitments, in particular, China’s failure to provide protection for United States intellectual property (IP) rights. Intellectual property protection is a major area of concern for United States exporters to China. According to the United States Patent and Trademark Office, China is the largest single source of seizures of infringing products by United States Customs—roughly $62.5 million or 66 percent of total goods seized, in fiscal year 2003…. While some progress has been made between our two nations in this regard, these new mechanisms are not being rigorously enforced by Chinese officials, leading some industry analysts to estimate that IP counterfeiting and piracy in China cost United States copyright firms $2.3 billion in lost sales in 2005. It is my hope that our two nations can continue to work together to ensure a level playing field in our commercial relations.” For more information, please contact Piper Largent, Professional Staff. _______________________________ Issues in brief On Wednesday, July 19, the House Judiciary Committee passed by a party-line vote of 21 to 12 the Workplace Goods Job Growth and Competitiveness Act of 2005 (HR 3509), which would create a statute of limitation of 12 years for product liability lawsuits against a manufacturer of capital goods used in the workplace. On Thursday, July 20, the Subcommittee on Commercial and Administrative Law of the House Judiciary Committee, chaired by Representative Chris Cannon (R-UT), held a hearing on the Regulatory Flexibility Act Improvements Act (H.R. 682), authored by House Small Business Committee Chairman Donald Manzullo (R-IL) and cosponsored by 18 other Members of Congress, including Subcommittee Chairman Cannon. H.R. 682 would close the loopholes in the Regulatory Flexibility Act (RFA), which requires federal agencies to take into account the affect of proposed regulations on small businesses prior to their final adoption and to develop alternatives to lessen the burden on small business. H.R. 682 also gives more tools to the Chief Counsel at the Office of Advocacy, who helps enforce the RFA throughout the Executive Branch, to combat poorly thought-out regulatory proposals. The House Small Business Committee held a similar hearing on this bill on March 16, 2005 (see SBC Notes 109-5). On Thursday, July 20, House Small Business Committee Chairman Donald Manzullo (R-IL) wrote a letter to the chairs of the House-Senate conference finalizing the Pension Security and Transparency Act of 2005 (H.R. 2830) asking them not to include in the final package any revenue-raising proposal that would broadly extend the application of payroll taxes on the net income of Subchapter S corporations. _______________________________ Upcoming Events Tuesday, July 25 2:00PM – full committee hearing on “Failure to Comply with the Regulatory Flexibility Act: IRS Endangering Small Businesses Yet Again.” This hearing will deal with Department of Treasury’s qualified intermediary regulatory proposal. Thursday, July 27 10:00AM in Room 428-A of the Senate Russell Office Building – the Senate Small Business & Entrepreneurship Committee mark-up of SBA reauthorization. _________________________________ Past hearings/mark-ups/roundtables/meetings in 2006 February 1, 2006 – Joint Tax, Finance & Exports (TF&E) and Rural Enterprises, Agriculture & Technology (REA&T) Subcommittee hearing on “Transforming the Tax Code: An Examination of the President’s Tax Reform Panel Recommendations.” February 8, 2006 – Regulatory Reform & Oversight (RR&O) Subcommittee hearing on “The Internet Sales Tax: Headaches Ahead for Small Business?” March 2, 2006 – Workforce Empowerment & Government Programs (WE&GP) Subcommittee hearing on the “Oversight of the Small Business Administration’s Entrepreneurial Development Programs.” March 8, 2006 – TF&E Subcommittee hearing on the “Oversight of the Small Business Administration’s Finance Programs.” March 15, 2006 – REA&T Subcommittee hearing entitled, “The Missouri River and its Spring Rise: Science or Science Fiction?” March 15, 2006 – hearing on the Fiscal Year 2007 Budget and Reauthorization Proposals of the SBA. March 16, 2006 – RR&O Subcommittee hearing entitled, “The State of Small Business Security in a Cyber Economy.” March 30, 2006 – RR&O Subcommittee hearing on the “Procurement Assistance Programs of the SBA.” April 5, 2006 – hearing on “IRS Latest Enforcement: Is the Bulls-Eye on Small Businesses?” April 6, 2006 – RR&O Subcommittee hearing entitled “Can Small Healthcare Groups Feasibly Adopt Electronic Medical Records Technology?” April 26, 2006 – hearing on “Cutting Our Trade Deficit: Can the U.S. Muster Its Diverse Trade Promotion Operations to Make an Impact?” April 27, 2006 – WE&GP Subcommittee hearing on “Healthcare and Small Business: Proposals that will Help Lower Costs and Cover the Uninsured.” May 3, 2006 – REA&T Subcommittee hearing on “The Future of Rural Telecommunications: Is Universal Service Reform Needed?” May 3, 2006 – hearing on “What is the Proper Balance between Investor Protection and Capital Formation for Smaller Public Companies?” May 10, 2006 – hearing on “Bridging the Equity Gap: Examining the Access to Capital for Entrepreneurs Act of 2006.” May 23, 2006 – RR&O Subcommittee hearing on “Data Protection and the Consumer: Who Loses When Your Data Takes a Hike?” May 25, 2006 – REA&T Subcommittee hearing on “Unlocking Charitable Giving.” June 7, 2006 – hearing on “Contracting the Internet: Does ICANN Create a Barrier to Small Business? June 21, 2006 – Joint hearing with the Government Reform Committee on “Northern Lights and Procurement Plights: The Effect of the ANC Program on Federal Procurement and Alaska Native Corporations.” June 27, 2006 – RR&O Subcommittee hearing on “S Corporations: Their History and Challenges.” June 27, 2006 – WE&GP Subcommittee hearing on “Immigrant Employer Verification and Small Business.” June 28, 2006 – TF&E Subcommittee hearing on “The Effects of the High Cost of Natural Gas on Small Businesses and Future Energy Technologies.” July 13, 2006 – RR&O Subcommittee hearing on “An Update on Administration Action to Reduce Unnecessary Regulatory Burdens on America’s Small Manufacturers.” July 20, 2006 – Joint REA&T and TF&E Subcommittee hearing on “Does China Enact Barriers to Fair Trade?” _____________________________ Small Business Website Check out the Small Business Committee website at http://www.house.gov/smbiz. The site includes regular updates on small business committee news. The site features special projects, press releases, hearings and scheduling information. _______________________________ Phil Eskeland Deputy Chief of Staff & Policy Director House Committee on Small Business Phil.Eskeland@mail.house.gov (202) 225-5821 To contact any staff member listed in the above newsletter, please use the general number for the House Small Business Committee – (202) 225-5821. Please E-mail me if you want to be removed from the mailing list or if you know of others who might be interested in receiving this publication. Mission Statement of the House Committee on Small Business "We promote the success of America’s small businesses by leveling the global economic playing field and reducing domestic burdens that impede their growth. In this spirit, we work to ensure that every branch of the U.S. government understands the critical role America’s small businesses play – both at home and abroad – including the jobs they create and the spirit of entrepreneurship they embody.”
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