Experts Recommend Ways Congress Can Address China's Dumping, Non-Market Trade Agenda
Congress should consider legislation that would clearly authorize the executive branch to target Chinese currency manipulation under U.S. trade remedy laws, American Iron and Steel Institute CEO Thomas Gibson said in testimony submitted for a July 14 Senate Banking, Housing, and Urban Affairs Committee hearing (here). That legislation -- the Currency Undervaluation Investigation Act -- sits in the Senate Finance Committee and would require the U.S. government to start a countervailing duty investigation when petitioned to find whether any foreign country’s government is “directly or indirectly” providing a countervailable subsidy to exporters' products through currency manipulation. A Senate Finance spokesperson said the legislation isn’t on the committee calendar.
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The Obama administration should also continue to deem China a non-market economy for antidumping purposes post-December 2016, after which China claims it should be no longer subject to such a status (see 1602290025), Gibson said. “We all know we have to trade. My gosh, we got to trade. We can’t build walls around us,” Senate Banking Committee Chairman Richard Shelby, R-Ala., said during the hearing. “Because [China] seems to target a big industry and people disappear: Companies disappear; jobs disappear. And this has now manifested itself into the current presidential race. Don’t kid yourself.”
U.S. steel producers continue to be hurt by the glut created by the dumping of related products originating in China, he said. The U.S. should “vigorously enforce” trade laws, including through the new anti-evasion tools given through the ENFORCE Act. Laws such as this and the Leveling the Playing Field Act are helping industry bring trade cases more quickly, Gibson said, adding that trade actions undertaken pursuant to these laws are reverberating through discussions at U.S.-China diplomatic fora (see 1606080041 and 1607110018). China has failed to deliver on assurances that it would reduce its steel capacity by 90 million tons between 2011 and 2015, as it has instead grown by 300 million tons, Gibson said. Chinese steel exports are set to rise again this year after spiking by 20 percent in 2015, he said. “They may have closed 90 million tons of obsolete capacity somewhere; their net capacity has increased.”
Falling steel demand in China compounded with Beijing’s non-market-based export decisions mean it’s extremely critical to act now to deter China from heavily subsidizing its steel market, Gibson said in prepared remarks. All four witnesses who testified, including U.S.-China Economic and Security Review Commission Chairman Dennis Shea, American Enterprise Institute resident fellow Desmond Lachman, and Heritage Foundation senior research fellow William Wilson agreed that China shouldn’t be accorded market economy status at the WTO, all pointing to Beijing’s non-market actions throughout their testimony. The WTO remains a sound, but sometimes costly, forum through which to challenge Chinese export policies, Shea said, as it can be lengthy, often is not used by small and medium-sized businesses, and its decisions are frequently ignored by Beijing. Shea also recommended the creation of a division of trade enforcement within the Justice Department.