Letter from Washington

Get Ready for a Busy Fall

by Erin Ennis

Before Congress adjourned for the month of August, it took more action on China-related issues and legislation. Here is a recap of what happened and what we think will—and will not—happen this fall.

Development

The Senate Banking and Finance committees each passed bills that address China's currency, both passing with sizeable majorities. Both measures have provisions that may be inconsistent with the United States' World Trade Organization (WTO) obligations. The US-China Business Council (USCBC) has weighed in against these provisions.

Next Steps

The Senate Banking and Finance committees will try to work out the differences in their competing currency bills in September. Senate Majority Leader Harry Reid (D-NV) has said only one currency bill will come before the Senate floor in the fall. It remains to be seen whether they can agree on a compromise approach or will choose one bill over the other. Even so, the Senate may not return to China legislation any time soon—this fall, it is slated to consider appropriations, an Iraq resolution, and a small measure called the Farm Bill. Nevertheless, floor time can always be found when the Senate really wants to take up an issue. That will be the case on currency legislation if a deal can be reached that garners support from both the Banking and Finance committees.

Development

The House Ways and Means Committee held its third China hearing of the year just before heading into its summer break. The hearing covered familiar ground, with many members voicing concern over China's exchange rate, government subsidies, and the safety of imported products. USCBC submitted testimony that urged members to avoid legislation that does not comply with WTO rules and that undermines US credibility.

Next Steps

Trade Subcommittee Chair Sander Levin (D-MI) said the purpose of the hearing was to set the stage for legislation that he is drafting. The Ways and Means committee staff worked on the measure in August, but it is not clear when it will be completed and ready for introduction. The bill will certainly address currency, but may also include provisions on alleged PRC subsidies and possibly intellectual property rights protection and import safety.

Trade enforcement legislation

In addition to these bills, Finance Committee Chair Max Baucus (D-MT) and Sen. Orin Hatch (R-UT) introduced legislation on trade enforcement that may be considered this fall. The bill would, among other things, limit the president's discretion in China-specific safeguard cases under Section 421 of the Trade Act of 1974. (Section 421 safeguards are China-specific limits on imports that cause or threaten to cause market disruption in the United States.) The broad measure also

Grants the Senate Finance and House Ways and Means committees the authority to require the US Trade Representative (USTR) to identify specific market access barriers in its annual report;
Creates a Senate-confirmed chief enforcement officer at USTR and forms an interagency trade enforcement working group; and
Establishes a commission to review WTO dispute settlement rulings and prohibits legal changes in accordance with the ruling until Congress receives the commission's report.

Regarding Section 421, the bill makes three changes. Under existing law, the president can waive the imposition of International Trade Commission-recommended trade restrictions on imports from China if he or she determines that such restrictions are not in the national economic interest of the United States or would cause serious harm to national security. The new bill requires extraordinary circumstances for both national security and economic waivers and stipulates that a waiver can be invoked only if the harm to national or economic security "clearly and significantly" outweighs the benefits of implementing the restrictions. Finally, the bill gives Congress the ability to overturn a presidential waiver by passing a disapproval resolution in both chambers. The threat of legislation passing this year is high, but it is possible that in 2007 neither chamber will reach a consensus that leads to a bill being presented to the president for signature (or veto). In that case, efforts to pass a bill will certainly continue in 2008—which is of course an election year in the United States. Legislative chaos may ensue.

USCBC action

USCBC has been toiling away on all of these issues and working on its submission for USTR's October interagency hearing on China's WTO compliance. In addition to the usual engagement with Capitol Hill offices, USCBC released the full analysis of US exports to China by congressional district. The analysis, undertaken by the Trade Partnership, quantifies US exports to China from 2000—the year before China joined the WTO— through 2006 from all 435 congressional districts in the 110th Congress. The report, which is available at www.uschina.org/public/ exports and has been frequently cited in national and local press, is meant to better inform the debate about China trade as our legislators consider actions.

Readers should keep one more item in mind for the fall: USCBC, other associations, and individual companies will likely be asked to weigh in publicly on specific legislative proposals. We should be ready to stand up and ensure that any bill that might move ahead is not detrimental to the bilateral trade relationship. USCBC is looking forward to the opportunity to do so, and we hope US companies will as well.

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 Get Ready for a Busy Fall by Erin Ennis Before Congress adjourned for the month of August, it took more action on China-related issues and legislation. Here is a recap of what happened and what we think will—and will not—happen this fall. Development The Senate Banking and Finance committees each passed bills that address China's currency, both passing with sizeable majorities. Both measures have provisions that may be inconsistent with the United States' World Trade Organization (WTO) obligations. The US-China Business Council (USCBC) has weighed in against these provisions. Next Steps The Senate Banking and Finance committees will try to work out the differences in their competing currency bills in September. Senate Majority Leader Harry Reid (D-NV) has said only one currency bill will come before the Senate floor in the fall. It remains to be seen whether they can agree on a compromise approach or will choose one bill over the other. Even so, the Senate may not return to China legislation any time soon—this fall, it is slated to consider appropriations, an Iraq resolution, and a small measure called the Farm Bill. Nevertheless, floor time can always be found when the Senate really wants to take up an issue. That will be the case on currency legislation if a deal can be reached that garners support from both the Banking and Finance committees. Development The House Ways and Means Committee held its third China hearing of the year just before heading into its summer break. The hearing covered familiar ground, with many members voicing concern over China's exchange rate, government subsidies, and the safety of imported products. USCBC submitted testimony that urged members to avoid legislation that does not comply with WTO rules and that undermines US credibility. Next Steps Trade Subcommittee Chair Sander Levin (D-MI) said the purpose of the hearing was to set the stage for legislation that he is drafting. The Ways and Means committee staff worked on the measure in August, but it is not clear when it will be completed and ready for introduction. The bill will certainly address currency, but may also include provisions on alleged PRC subsidies and possibly intellectual property rights protection and import safety. Trade enforcement legislation In addition to these bills, Finance Committee Chair Max Baucus (D-MT) and Sen. Orin Hatch (R-UT) introduced legislation on trade enforcement that may be considered this fall. The bill would, among other things, limit the president's discretion in China-specific safeguard cases under Section 421 of the Trade Act of 1974. (Section 421 safeguards are China-specific limits on imports that cause or threaten to cause market disruption in the United States.) The broad measure also Grants the Senate Finance and House Ways and Means committees the authority to require the US Trade Representative (USTR) to identify specific market access barriers in its annual report; Creates a Senate-confirmed chief enforcement officer at USTR and forms an interagency trade enforcement working group; and Establishes a commission to review WTO dispute settlement rulings and prohibits legal changes in accordance with the ruling until Congress receives the commission's report. Regarding Section 421, the bill makes three changes. Under existing law, the president can waive the imposition of International Trade Commission-recommended trade restrictions on imports from China if he or she determines that such restrictions are not in the national economic interest of the United States or would cause serious harm to national security. The new bill requires extraordinary circumstances for both national security and economic waivers and stipulates that a waiver can be invoked only if the harm to national or economic security "clearly and significantly" outweighs the benefits of implementing the restrictions. Finally, the bill gives Congress the ability to overturn a presidential waiver by passing a disapproval resolution in both chambers. The threat of legislation passing this year is high, but it is possible that in 2007 neither chamber will reach a consensus that leads to a bill being presented to the president for signature (or veto). In that case, efforts to pass a bill will certainly continue in 2008—which is of course an election year in the United States. Legislative chaos may ensue. USCBC action USCBC has been toiling away on all of these issues and working on its submission for USTR's October interagency hearing on China's WTO compliance. In addition to the usual engagement with Capitol Hill offices, USCBC released the full analysis of US exports to China by congressional district. The analysis, undertaken by the Trade Partnership, quantifies US exports to China from 2000—the year before China joined the WTO— through 2006 from all 435 congressional districts in the 110th Congress. The report, which is available at www.uschina.org/public/ exports and has been frequently cited in national and local press, is meant to better inform the debate about China trade as our legislators consider actions. Readers should keep one more item in mind for the fall: USCBC, other associations, and individual companies will likely be asked to weigh in publicly on specific legislative proposals. We should be ready to stand up and ensure that any bill that might move ahead is not detrimental to the bilateral trade relationship. USCBC is looking forward to the opportunity to do so, and we hope US companies will as well. Erin Ennis is vice president of the US-China Business Council in Washington, DC. Further Reading Letter from Washington: Measuring Success at the Upcoming Dialogue Letter from Beijing: Sustain This Letter from Shanghai: The Prodigal Prodigy Letter from Washington: The New Congress Click here for copyright permissions Copyright 2007 US-China Business Council Top of Page Table of Contents
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Letter from Washington

Get Ready for a Busy Fall

Development

Next Steps

Development

Next Steps

Trade enforcement legislation

USCBC action

Further Reading