Congress Passes Bill Preserving Duties on Chinese Imports

08/03/2012 12:00 - 378 Views

The U.S. Congress passed bipartisan legislation letting the Commerce Department apply duties to offset government subsidies in nations such as China (TBBLCHNA) and sent it to President Barack Obama, who backs the measure.

The bill responds to a Dec. 19 decision by a U.S. appeals court in Washington that said existing law doesn’t authorize the agency to set tariffs on goods from countries lacking a domestic market to establish prices. The House today passed the legislation 370-39 after the Senate backed it yesterday. Vice President Joe Biden, U.S. Trade Representative Ron Kirk and Commerce Secretary John Bryson praised the bill.

“This legislation is a vote against allowing China to continue its inappropriate and unfair practices,” Representative Dave Camp, a Michigan Republican who sponsored the bill, said in an e-mailed statement. The bill won “broad bipartisan support in the House,” unanimous approval in the Senate and full support from the administration, he said.

Passage marks a rare achievement for a divided Congress that has yielded few accomplishments since Republicans took control of the House last year.

“I hope this is the beginning of more bipartisan trade negotiations,” Representative Bill Pascrell, a New Jersey Democrat, said today on the House floor. “I think it’s healthy. Let’s not stop with the passage of this bill but continue to move forward on a fair trade policy that puts American workers and businesses first.”

Court Challenge

The legislation overcomes a court’s challenge of a policy, in place since President George W. Bush’s administration that led to U.S. duties on undervalued imports of about two dozen Chinese products. Companies that have benefited from duties include U.S. paper and steel manufacturers.

The court ruling had put in jeopardy duties on tires, steel, aluminum, paper, chemicals and other imports valued at $4.7 billion a year, according to a legislative report by Bloomberg Government. The U.S. had issued 24 orders on the imports, mostly from China and Vietnam, according to the analysis.

Republican Representatives Dave Camp of Michigan, chairman of the House Ways and Means Committee, and Kevin Brady of Texas, as well as Sander Levin of Michigan, the senior Democrat on the committee, and Jim McDermott, a Washington Democrat, co- sponsored the House version. The Senate version was sponsored by Senator Max Baucus, a Montana Democrat who leads the Finance Committee, and John Thune of South Dakota, the senior Republican on the committee’s trade panel.

Jobs Protected

Since 2007, the policy helped protect an estimated 80,000 U.S. jobs, Baucus and Thune said in a statement.

“Congress has taken a clear stand against the unfair trade practices that have put countless American jobs in jeopardy,” Biden said in an e-mailed statement. “We will continue to use every available tool to make sure America’s trading partners play by the rules, because when they do, U.S. businesses and workers can fairly compete, and out-compete anyone.”

The House and Senate have been riven in the past year by partisan battles over spending, which brought the U.S. to the brink of government shutdowns four times last year. Debate on steps to cut the deficit collapsed in November.

This year, Congress extended a payroll tax cut through December, though lawmakers in both parties say little else may get done besides bills funding federal agencies.

Congress Popularity

The public’s contempt for Congress has grown amid the inactivity. Last month, the Gallup Poll registered the lowest- ever approval rating for Congress, with just 10 percent of Americans saying they approved of the job Congress is doing. That was down from 13 percent in a January poll and a previous low of 11 percent in December. The nationwide poll of 1,029 adults was conducted Feb. 2-5.

The Club for Growth, an anti-tax advocacy group based in Washington, opposes the House bill, saying it will hurt U.S. businesses and the nation’s trade relationship with China.

“These duties restrict economic liberty and are anti- growth,” the group said in a statement to lawmakers posted on its website, warning that it will hold them accountable for their votes. “We strongly urge members of Congress to defeat this proposal.”

The countervailing duties legislation also seeks to resolve a World Trade Organization determination in 2011 that said a method the Commerce Department uses to determine duty margins violates U.S. international trade obligations.

Level Playing Field

“It is critical to leveling the playing field for American employers and workers who face unfairly subsidized imports from countries like China,” Kirk said in an e-mailed statement.

Scott Lincicome, a trade lawyer at White & Case LLP in Washington, said the bill faces legal challenges and will hurt the U.S. relationship with China, the world’s second-biggest economy.

“The only question is whether Beijing brings its concerns to the World Trade Organization or pursues more aggressive unilateral action against U.S. exporters and investors,” Lincicome said in an e-mail.

In December, the U.S. Court of Appeals for the Federal Circuit ruled unanimously that Commerce needed action by Congress to set tariffs on subsidized goods from nations, such as China and Vietnam, that lack a domestic market. The three- judge panel upheld a U.S. Court of International Trade decision that declared illegal tariffs on Chinese tires.

Anti-dumping duties apply to goods sold overseas at or below the price in the home country. Countervailing duties aim to offset the benefits of government subsidies to industries.

The House bill is H.R. 4105.

By Eric Martin and Laura Litvan

Source: Bloomberg.com