Congress & China

The Issue:

Due to recent product safety concerns, accusations of currency manipulations, and general rising protectionist sentiment on Capitol Hill, legislatures have been holding hearings and introducing anti-China legislation.

AAFA on the Issue:

While AAFA shares the lawmakers' frustration that the path toward currency adjustment has not gone more quickly, we note that slow and deliberate change, rather than abrupt shifts, is the key to predictability to make sure business is not disrupted. We also oppose this type of legislation because it is in direct conflict with the World Trade Organization rules.

The Latest News:

04.21.08

The US International Trade Commission (ITC) has published the first of three reports requested by Congress to assess the Chinese government's economic policies with respect to the current US-China trade imbalance. The report also concluded that, while the Chinese government’s economic involvement varies by sector, overall, it is generally less involved than in the past. However, significant ambiguity remains about the actual implementation of various laws and regulations, as local and provincial authorities enjoy substantial autonomy in their application. AAFA has submitted comments to the ITC regarding the second of these reports, which will be published this summer.

12.03.07

The US International Trade Commission (ITC) announced November 20 that it rejected the first-ever anti-subsidy (countervailing duty-CVD) case against China. The ITC voted 5-1 that a US industry was neither materially injured nor threatened with material injury by reason of imports of coated free sheet paper from China, Indonesia and Korea. Overturning twenty years of precedent, the US Department of Commerce had determined that imports of coated free sheet paper (glossy paper used in magazines and other publications) from China were subsidized and sold in the United States at less than fair value. However, the ITC decision effectively ends the case.

11.27.07

AAFA member CEOs joined the CEOs of over 100 US companies, both big and small, in sending a November 14 letter to Congress urging Congress to consider the important relationship the United States has with China and take a rational approach to legislation involving China.

10.01.07

AAFA joined with over 150 companies and associations representing virtually the entire US manufacturing, services and agricultural communities in sending a September 26 letter to every member of Congress urging Congress to take a rational and balanced approach when considering legislation that could affect US-China relations.

09.17.07

In the first case brought by China since it joined the World Trade Organization (WTO) in 2001, China filed a WTO dispute settlement case on September 14 against the United States for its anti-dumping and countervailing duty cases against US imports of coated paper for China. In the case, the United States broke with its own 23-year old policy not allowing countervailing duty cases against non-market economies, like China, because it is impossible to determine the actual value of subsidies in a non-market economy. Prior to this case, the United States compensated for alleged subsidies in China by using third countries, called "surrogate" countries to determine actual market costs and prices, the result of which is that there has historically been much higher dumping duties against US imports from China than against market economy countries. In its WTO case, China alleges that by allowing both an anti-dumping and a countervailing duty (anti-subsidy) case against US imports of Chinese coated paper, the United States has imposed WTO-illegal double taxes against its exports for the same alleged violation. The WTO case calls into question various pieces of AAFA-opposed legislation moving through Congress that legislates the use of countervailing duty cases against China for currency manipulation and a range of other alleged offenses.

08.03.07
On July 26, the Senate Finance Committee approved on a 20-1 vote the first of many anti-China measures. The Currency Exchange Rate Oversight Reform Act of 2007 requires the U.S. Treasury Department to identify "fundamentally misaligned" currencies to Congress twice a year, classifying some countries for "priority action" if the misalignment is clearly caused by a foreign government's economic policies. Treasury will be required to consult with countries found to have fundamentally misaligned currencies. The legislation imposes a number of immediate consequences for countries designated for "priority action," including accounting for currency undervaluation in determining whether a country should graduate from non-market economy status for purposes of U.S. antidumping rules. If a country fails to take appropriate action within three months, the U.S. Commerce Department must take currency undervaluation into account when making antidumping calculations for products exported from the designated country. Only a few days later, the Senate Banking Committee approved similar legislation (S.1677). Finally, the powerful House Ways and Means Committee held a hearing August 2^nd covering a wide range of topics related to China in preparation for marking up their own version of Anti-China legislation this fall (AAFA testimony). The future of the legislation is unclear due to the competing legislation in the U.S. Senate and a jurisdictional dispute between the Senate Finance and the Senate Banking Committees as well as the myriad of different anti-China bills working their way through the U.S. House of Representatives.