Letter from Washington

The New Congress

by Erin Ennis

On November 7, 2006, the Democratic Party regained control of both the House of Representatives and the Senate, though by only the narrowest margin in the Senate.

The change in the House was dramatic. Democrats needed 15 seats to take the majority; they got 31. Among the Republican incumbents that lost were several who had been in the House for more than 20 years and who had leadership or high-profile roles, including Nancy Johnson (Connecticut; first elected in 1982), Jim Leach (Iowa; first elected in 1976), Clay Shaw (Florida; first elected in 1980), and Curt Weldon (Pennsylvania; first elected in 1986).

The House

With the change in power, a new leadership will be running the House. Nancy Pelosi (Democrat [D], California) was elected Speaker of the House on November 16. Pelosi, the first woman to hold that position, has been an outspoken critic of China's human rights policies.

House committee leadership posts are expected to be given to members currently serving as ranking members. Charles Rangel (D, New York) will be Ways and Means Committee chair. Rangel has let it be known that he thinks more needs to be done on trade with China. He has also pledged, however, to work with Republicans.

At a minimum, the number of hearings and bills on China issues will likely increase in the House. These could focus on matters such as China's labor and environmental practices and the efforts of US companies in these areas. That record is positive, but could be challenged nonetheless.

The Senate

In the Senate, the Democrats have a very slim majority of 51-49, so major initiatives that do not have bipartisan support are unlikely to get far. The Senate Finance Committee has jurisdiction over trade matters, and the top Democrat and Republican have a good working relationship. Max Baucus (D, Montana) will become chair of the Finance Committee, and Charles Grassley (Republican [R], Iowa) will take the role of ranking member.

All will not be quiet in the Senate, however. At least two vocal antitrade House members were elected to the Senate: Sherrod Brown (D, Ohio), and Bernie Sanders (Independent, Vermont). Expect them to team up with members like Charles Schumer (D, New York) and Lindsey Graham (R, South Carolina) to try to come up with creative ways to force China to act on issues of concern to Congress.

What's in store?

China trade issues could play out in a variety of ways during the 110th Congress. One scenario would be a great deal of talk about China trade, but no legislation that passes both chambers. This scenario is possible because with such a slim majority in the Senate, bipartisan support will be needed to pass any bill.

On the other hand, it is also remotely possible that the Senate, and then the House, could pass a bill harmful to China trade—for instance, something along the lines of the Schumer-Graham bill, which sought to impose a 27.5 percent tariff on all US imports from China. If that were to happen, the White House could veto the measure, though President George W. Bush has vetoed only one bill in his six years in office. If Bush vetoed such a bill, the House and Senate could still decide to override the president.

No matter how you slice it, Congress will likely be busy with difficult and contentious trade issues. The business community's job will be to continue to advocate a balanced trade agenda. Business must also be prepared to show that it is living up to its claims: that US companies operating in China bring their higher labor and environmental standards to their operations there and are helping to improve working and environmental conditions.

While USCBC and its member companies will continue to educate members of Congress on the benefits of our commercial relationship with China (US exports were up another 35 percent through the third quarter of 2006, for example), positive actions by the PRC government would also help to avert possible congressional action. Progress on key issues like the exchange rate, intellectual property rights enforcement, the elimination of subsidies that violate World Trade Organization rules, and the enforcement of China's labor and environmental laws would go a long way to reducing anti-China-trade sentiment in Congress.

Erin Ennis is vice president of the US-China Business Council in Washington, DC.

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	E-Mail \| Print \| License Letter from Washington The New Congress by Erin Ennis On November 7, 2006, the Democratic Party regained control of both the House of Representatives and the Senate, though by only the narrowest margin in the Senate. The change in the House was dramatic. Democrats needed 15 seats to take the majority; they got 31. Among the Republican incumbents that lost were several who had been in the House for more than 20 years and who had leadership or high-profile roles, including Nancy Johnson (Connecticut; first elected in 1982), Jim Leach (Iowa; first elected in 1976), Clay Shaw (Florida; first elected in 1980), and Curt Weldon (Pennsylvania; first elected in 1986). The House With the change in power, a new leadership will be running the House. Nancy Pelosi (Democrat [D], California) was elected Speaker of the House on November 16. Pelosi, the first woman to hold that position, has been an outspoken critic of China's human rights policies. House committee leadership posts are expected to be given to members currently serving as ranking members. Charles Rangel (D, New York) will be Ways and Means Committee chair. Rangel has let it be known that he thinks more needs to be done on trade with China. He has also pledged, however, to work with Republicans. At a minimum, the number of hearings and bills on China issues will likely increase in the House. These could focus on matters such as China's labor and environmental practices and the efforts of US companies in these areas. That record is positive, but could be challenged nonetheless. The Senate In the Senate, the Democrats have a very slim majority of 51-49, so major initiatives that do not have bipartisan support are unlikely to get far. The Senate Finance Committee has jurisdiction over trade matters, and the top Democrat and Republican have a good working relationship. Max Baucus (D, Montana) will become chair of the Finance Committee, and Charles Grassley (Republican [R], Iowa) will take the role of ranking member. All will not be quiet in the Senate, however. At least two vocal antitrade House members were elected to the Senate: Sherrod Brown (D, Ohio), and Bernie Sanders (Independent, Vermont). Expect them to team up with members like Charles Schumer (D, New York) and Lindsey Graham (R, South Carolina) to try to come up with creative ways to force China to act on issues of concern to Congress. What's in store? China trade issues could play out in a variety of ways during the 110th Congress. One scenario would be a great deal of talk about China trade, but no legislation that passes both chambers. This scenario is possible because with such a slim majority in the Senate, bipartisan support will be needed to pass any bill. On the other hand, it is also remotely possible that the Senate, and then the House, could pass a bill harmful to China trade—for instance, something along the lines of the Schumer-Graham bill, which sought to impose a 27.5 percent tariff on all US imports from China. If that were to happen, the White House could veto the measure, though President George W. Bush has vetoed only one bill in his six years in office. If Bush vetoed such a bill, the House and Senate could still decide to override the president. No matter how you slice it, Congress will likely be busy with difficult and contentious trade issues. The business community's job will be to continue to advocate a balanced trade agenda. Business must also be prepared to show that it is living up to its claims: that US companies operating in China bring their higher labor and environmental standards to their operations there and are helping to improve working and environmental conditions. While USCBC and its member companies will continue to educate members of Congress on the benefits of our commercial relationship with China (US exports were up another 35 percent through the third quarter of 2006, for example), positive actions by the PRC government would also help to avert possible congressional action. Progress on key issues like the exchange rate, intellectual property rights enforcement, the elimination of subsidies that violate World Trade Organization rules, and the enforcement of China's labor and environmental laws would go a long way to reducing anti-China-trade sentiment in Congress. Erin Ennis is vice president of the US-China Business Council in Washington, DC. Further Reading Letter from Washington: Five Years On All Quiet on the Potomac? A Balanced Approach to Trade with China Click here for copyright permissions Copyright 2007 US-China Business Council Top of Page Table of Contents
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Letter from Washington

The New Congress

The House

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What's in store?

Further Reading