Senate Finance Continues Trade Pressure on China, Super 301 Bill Expected
On June 23, 2010, the Senate Finance Committee held a hearing on “the U.S.-China Trade Relationship: Finding a New Path Forward.” Testifying at the hearing were U.S. Trade Representative Kirk and Commerce Secretary Locke.
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Highlights of the witnesses’ written statements, Committee member statements, as well as Committee member questions and witness answers, include:
Currency
Commerce is considering China currency in two CV investigations. According to Secretary Locke, the International Trade Administration is currently reviewing allegations in two countervailing cases (coated paper and aluminum extrusions) in which the petitioners claim that China currency policy constitutes a countervailable subsidy. Secretary Locke assured the Committee that if the facts merit an investigation, one will launched.
Senators to still pursue China currency legislation. Chairman Baucus (D) and Senator Schumer (D) noted that even though China recently announced that it would reform its currency practices, they still intend to pursue legislation against currency manipulation.
Senator Schumer stated that he would soon be bringing China currency legislation to the Senate floor and Chairman Baucus stated that he would be reintroducing legislation on foreign currency manipulation and would be marking up that legislation.
Grassley calls for WTO case against China currency. Ranking Member Grassley’s (R) written statement indicates that he is calling on the President to prepare a case against China’s currency manipulation under Article XV of the General Agreement on Tariffs and Trade at the World Trade Organization.
U.S. will continue to talk to China about currency at G20 meeting. In response to question about whether China’s recent actions on currency would take the currency issue off the table at the upcoming G20 meetings, USTR Kirk assured Committee members that the Administration would continue to engage with China regarding its currency at the upcoming G20 meetings (at the end of June).
Indigenous Innovation, IPR
Multilateral pressure has been effective against indigenous innovation policies. Secretary Locke testified that multilateral pressure has resulted in changes to China’s indigenous innovation policies. Secretary Locke testified that as a result of multilateral pressure, China changed its November 2009 indigenous innovation policies and has delayed the implementation of its revised second version of its policy.
Fall 2010 JCCT meeting priorities include indigenous innovation, IPR, etc. According to USTR Kirk, the agenda for the upcoming U.S.-China Joint Commission on Commerce and Trade (JCCT) meeting (fall 2010) will include indigenous innovation and other discriminatory industrial policies, improving enforcement of IPR, ending non science-based regulations that block U.S. agriculture exports and obtaining increased services market access.
Super 301 and Other Tools
Senator Baucus intends to introduce “Super 301” bill. During a discussion on whether Commerce and the USTR have enough “tools” to effectively deal with China, Chairman Baucus stated that he plans to give the Administration another tool when he introduces an enhanced Super 301 bill with greater remedies when countries are found in violation, e.g., loss of Generalized System of Preferences benefits1, restrictions on government procurement, etc.
(Super 301 authority expired in 1990; it was then modified and reactivated for two years (1994-1995).)
Baucus Asks Locke, Kirk to assess their enforcement tools. Chairman Baucus asked both Locke and Kirk to come back to the Committee with an assessment of whether the agencies have the right enforcement tools to deal with China.
1China is not a GSP country.