U.S. lawmakers agree on bill to fight China subsidies

Feb 29, 2012 Issues: Trade

"This legislation preserves our ability to fight unfair subsidies granted by countries like China that injure our industries, cost U.S. jobs, and distort the market," Representative Dave Camp, Republican chairman of the House of Representatives Ways and Means Committee, said in a statement.

The United States currently has countervailing - or anti-subsidy - duties on about two dozen goods from China and Vietnam. But it could have to remove those in coming weeks because of a federal appeals court ruling that the Commerce Department does not have legal authority to impose countervailing duties on "non-market economies."

Camp said he would introduce the bill later on Wednesday along with Representative Kevin Brady, a Republican, and Representatives Sander Levin and Jim McDermott, both Democrats.

"We expect to move this legislation shortly," Camp said at hearing on the Obama administration's trade agenda for 2012.

A companion bill is expected to be introduced in the Senate.

"This is vital legislation for tens of thousands of American workers who would have had the rug pulled out from under them by the Court of Appeals decision," Levin said.

U.S. Trade Representative Ron Kirk told the Ways and Means panel the Obama administration supported quick passage of legislation to address the appeals court's "flawed decision."

Lawmakers on both the Ways and Means Committee and the Senate Finance Committee have been working for weeks on a bipartisan bill to address the court decision, but have run into opposition recently from a conservative Republican group, Club for Growth.

The group, which is influential with many Republicans in the conservative Tea Party movement, has urged lawmakers to vote against the legislation because it says the countervailing duties "restrict economic liberty and are anti-growth."

"Rather than pursue a pro-growth solution to this situation, like re-defining China and Vietnam as market economies, Congress wants to give the executive branch the continued authority to impose these punitive tariffs," the group's vice president Andy Roth said in a statement.


For years, the Commerce Department did not impose countervailing - or anti-subsidy - duties on non-market economies on the grounds it was impossible to measure subsidies in countries where the state played such a central role.

That changed in the mid-2000s, when industry groups persuaded the administration of then-President George W. Bush that China had advanced enough that it was possible to calculate subsidies. However, the groups did not want Commerce to take the additional step of designating China as a market economy because that could potentially adversely affect how another type of trade remedy, antidumping duties, are calculated.

China contested the policy change both at the World Trade Organization and through the U.S. court system.

At the WTO, it won a decision that the United States was "double counting" many Chinese subsidies when it applied both countervailing and antidumping duties on the same good.

Then in December, the U.S. Court of Appeals for the Federal Circuit ruled the Bush administration should have obtained legislation from Congress to make the policy change because the previous practice of not applying countervailing duties to non-market economies had become embedded in U.S. law.

The administration now has until March 5 to decide whether to ask the entire court of appeals to review the decision made by the three-judge panel in December.

If the review is granted, then the December court ruling would not go into effect while the issue is being considered by the full appeals court.

If the review is denied, then the Commerce Department could have to remove existing countervailing duties on goods from China and Vietnam within a matter of days.