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For Immediate Release
August 1, 2007 |
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Levin to Hold Hearing on China Trade Legislation
Food Safety, Currency Manipulation, US Trade Laws To Be Examined |
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(Washington D.C.)- The Ways and Means Trade Subcommittee, chaired by Rep. Sander Levin (D-MI), is holding a hearing on Thursday, August 2, 2007 to review legislation introduced on trade with China. The hearing will take place in the main Committee hearing room, 1100 Longworth House Office Building, at 9:00 a.m.
The legislation to be examined includes bills to address trade-distorting currency practices, as well as legislation to modify U.S. trade remedy laws. In addition, the hearing will address the safety of food imports into the United States.
“China is an important trading partner that presents numerous competitive challenges to U.S. workers and businesses,” said Rep. Sander Levin (D-MI). “It is vital that we have an active and effective trade policy towards China that ensures they are adhering to the rules of international trade and not manipulating their currency to gain an unfair competitive advantage.”
At the Hearing, House and Senate Members will testify about legislation they have introduced or are supporting, Administration officials from the Department of Commerce, Department of Treasury, the Office of the U.S. Trade Representative and U.S. Customs and Border Protection, Department of Homeland Security and individuals from the private sector will also testify about the proposed legislation.
BACKGROUND:
Trade flows between the United States and China are substantial, growing, and heavily imbalanced. U.S. exports to China in 2006 were $55.2 billion, up from $41.9 billion in 2005, and $19.2 billion in 2001, the year China acceded to the WTO. U.S. imports from China in 2006 were $287.8 billion, up from $243.5 billion in 2005, and $102.3 billion in 2001. The result is a large and growing U.S. goods trade deficit with China: $232.6 billion in 2006 – the largest trade deficit in U.S. history. (The United States had a services trade surplus with China of $2.6 billion in 2005, up from $1.8 billion in 2004 and $2.0 billion in 2001.) In the first five months of 2007, the U.S. trade deficit with China was higher than in the first five months of 2006. In 2006, China accounted for roughly 12 percent of total U.S. trade and 30 percent of the total U.S. goods trade deficit with the world.
Currency Practices. Economists generally consider that the Chinese renminbi (also called the “yuan”) is undervalued relative to the U.S. dollar, with estimates ranging from 9.5% to 54%. China holds more than $1.3 trillion in foreign exchange reserves – reserves that help to keep the value of its currency relatively low and China’s exports to the United States relatively less expensive, in U.S. dollar terms, than they otherwise would be. The currency issue was the subject of a tripartite hearing (between the Trade Subcommittee, and the relevant subcommittees of the Financial Services Committee and the Energy and Commerce Committee) on May 9.
A number of bills have been introduced to address the problem of persistent and substantial currency misalignment. The bills take varying approaches. For example, some would provide for the imposition of antidumping and countervailing duties to address the fundamental misalignment of a currency in certain circumstances, and require the Treasury Department to consult with countries that are found to have fundamentally misaligned currencies. Others would apply across-the-board duties on all imports from China, so long as China is manipulating its currency.
Modifications to Trade Remedy Laws. Existing U.S. trade remedy laws include the antidumping law, the countervailing duty law (to address subsidized imports), and the law to provide relief from “market disruption” caused by imports from China (section 421 of the Trade Act of 1974, as amended). Increasingly, China is a major source of dumped and injurious imports, with nearly 85% of imports subject to new antidumping orders since 2004 originating from China, and it has many subsidy programs that could distort trade between the United States and China.
A wide variety of bills has been introduced in the 110th Congress to modify each of these three laws. One bill would: (1) defer U.S. compliance with decisions by the WTO Appellate Body (regarding a ruling that the United States is required to offset dumped sales with non-dumped sales) until the Administration clarifies U.S. rights and obligations within WTO multilateral negotiations and (2) overrule a U.S. Federal Circuit opinion requiring the U.S. International Trade Commission to undertake an additional analytic step before making an affirmative injury determination in certain cases. Another bill would amend U.S. trade remedy laws so that U.S. manufacturers that use products subject to countervailing or antidumping duty proceedings or use domestic like products (industrial users) can participate in such proceedings. There is also legislation that would clarify that U.S. countervailing duty law applies to nonmarket economy countries. Finally, there is a bill pending that would remove the President’s discretion not to impose Chinese safeguard relief to the extent that imposing such relief would have an adverse impact on the U.S. economy clearly greater than the benefits of such action.
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