Outlook on 2009 - US Trade Legislation

Future activities of the US House Committee on Ways and Means are critical to trade relations, especially its review of systemic problems in Sino-U.S. trade relations, which include issues related to China and US intellectual property rights and use of industrial subsidies, and China's alleged manipulation of its currency.

According to a list of proposed activities circulated by the US House Committee on Ways and Means (111^th Congress), the Ways and Means Trade Subcommittees will focus on several trade issues, such as the enforcement of WTO rights, ways to strengthen US trade remedy laws, trying to improve existing mechanisms to open foreign markets to US products, and improving border enforcement (i.e., problems of counterfeit imports and import safety). There is also H.R. 496, the proposed new trade law.

"H.R. 496, the Trade Enforcement Act of 2009, would actively open markets by eliminating foreign barriers to U.S. goods and services exports, combat counterfeiting and piracy, restore rights under U.S. trade remedy laws and strengthen the U.S. ability to address unfair and illegal trade practices. The bill comes after years of lax enforcement under the Bush Administration. "'In order to reap the benefits of trade, and solidify the United States' role as a participant in international affairs, it is vital that our trading partners play by the same rules,' said Chairman Rangel. 'Our trading partners need to live up to their end of the agreements and open their markets to U.S. exporters. This bill would help eliminate trade-distorting subsidies, and the dumping of products into our market. Simultaneously, the legislation will preserve intellectual property rights, and ensure that exports to the United States are safe. The Trade Enforcement Act will help to regain confidence in U.S. trade policy.' Further, 'The Trade Enforcement Act will help to expand markets for U.S. exporters, shape the terms of competition, and ensure that trade violations are addressed,' said Chairman Levin. 'It is only through an activist agenda that we can have the two-way trade that expands markets and shapes globalization.'"

Although many of these issues are also addressed in the Trade Enforcement Act of 2009 (H.R. 496), on January 14, 2009, the Ways and Means Committee Chairman Charlie Rangel (Democrat-NY) and Trade Subcommittee Chairman Sandy Levin (Democrat-Mich) introduced wide-ranging legislation, which may be considered within the next few months and addresses issues of promoting and strengthening US trade enforcement efforts, such as the following.

"The Department of Commerce's decision to allow countervailing duties to be assessed against products from non-market economy countries such as China would be codified, which would provide firmer legal ground for this trade remedy mechanism and prevent future administrations from reversing course. The legislation makes the presumption that special difficulties exist in calculating the amount of subsidy benefits in China and would therefore require the DOC to use terms and conditions prevailing outside the mainland. In addition, the legislation would allow the DOC to use special methodologies even if China eventually graduates from NME to market economy status.

The DOC would be barred from considering requests for market economy treatment at the individual business enterprise level in anti-dumping proceedings involving an NME.

Congress would have to approve any decision by the DOC to graduate a country from NME to market economy status.

The president's discretion to deny relief in a Section 421 China product-specific safeguard investigation would be limited. The legislation would allow Congress to override a presidential decision not to establish temporary duties or quotas when recommended by the U.S. International Trade Commission and would impose additional limitations on the president's authority to deny remedial action.

The Office of the U.S. Trade Representative would be required to identify annually "priority foreign countries" with unfair trade barriers and take action to eliminate those barriers.

The "Super 301" process would be restored and the USTR would be required to annually prioritise the most significant barriers to U.S. exports and work to eliminate them.

An Office of the Congressional Trade Enforcer would be created to investigate barriers to U.S. exports, develop complaints against foreign countries and call on the USTR to file cases."

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In the end, according to the Hong Kong Trader, the House may approve such legislation, propose an amended version of the same legislation or even attach other provisions to the legislation. The trade subcommittee also intends to examine other issues of interest. For example, it plans to hold hearings to assess the efficacy of U.S. preferential duty programmes such as the Generalised System of Preferences and evaluate options for reform. … Moreover, the subcommittee may consider exploring the possibility of providing additional duty preferences to least-developed countries such as Bangladesh and Cambodia, including possible tariff breaks for certain textile and apparel products. … Finally, the trade subcommittee plans to draft a new miscellaneous tariff bill, which would provide duty suspensions for thousands of products on a temporary basis.

Virtually all duty suspensions currently in effect will expire at the end of this year as the previous Congress did not enact an MTB. Generally, provisions for new duty suspensions may be added during this process provided the action is not controversial (i.e., no U.S. party objects) and certain revenue limitations are not exceeded. Of special significance is a bill that could be included in an eventual MTB package or considered as stand-alone legislation that would provide duty-free treatment to U.S. imports of a wide variety of shoes, including lower to moderately-priced footwear and children's shoes. The tariff lines covered by this legislation account for approximately 60 percent of all shoes currently sold in the United States, which are mostly of mainland Chinese origin.

There is strong bi-partisan support for removing these duties because their original purpose of protecting domestic production is no longer valid and they impose a heavy burden on low- and middle-income households. Import duties on types of shoes that are still produced in the U.S., mostly higher-quality niche products, would not be affected by this legislation. In addition to all of this, the House Energy and Commerce Committee are expected to consider legislation introduced by Rep. John Dingell (Democrat-Michigan) to enhance the safety of imported food and drugs.

References:

House Ways and Means, Rangel, Levin Introduce Trade Enforcement Bill -- Bill would strengthen enforcement, help to ensure that trading partners play by the rules, For Immediate Release: January 15, 2009.

Outlook for Congressional Action on Trade-Related Legislation this Year, Hong Kong Trader, Issue 04, February 27, 2009.

H.R. 496, the Trade Enforcement Act of 2009, Click here to read a short summary of the bill.

Rep. Sandy Levin (D.-Mich), Op-Ed, A policy that goes on the offense for U.S. businesses and workers, The Hill.com, June 10, 2008.