WASHINGTON – A proposal co-sponsored by Sen. Evan Bayh,D-Ind.,that could make China pay tariffs on subsidized goods it exports to the United States drew support from 14 U.S. manufacturing organizations Wednesday.
Bayh and other supporters of the bill named the organizations,which include the American Textile Manufacturers Institute and the United Steel Workers of America,at a press conference. The bill has also been introduced in the House.
The United States can impose tariffs on foreign government-subsidized imports from free-market economy countries. But because China is considered a non-market economy,the tariffs,or countervailing duty taxes,do not apply.
Bayh said this creates an unfair advantage for Chinese manufacturers.
“This bill cuts right through the red tape to the real heart of the matter – keeping American jobs – and provides an important tool to ensure that our workers have a fair playing field when they compete with companies overseas,” Bayh said.
He cited one Indiana company,Batesville Tool and Die,that said it has lost bids to a Chinese company that offered to supply auto parts for a half cent higher than the cost of the raw materials – which means production and labor costs were likely subsidized.
The proposal,introduced March 12,comes during a national debate about outsourcing and unemployment. China,in particular,has come under a lot of attack lately,said Jeff Bergstrand,an associate professor of macroeconomics and international finance at the University of Notre Dame.
“A lot of jobs have been going to China,” Bergstrand said. “It's been expanding a lot.”
But he said the proposal is “poor trade policy” because it doesn't get to the root of the problem – Chinese currency devaluation.
“China's competitiveness has nothing to do with its general structure,” Bergstrand said. “It's fixing its exchange rate against the dollar – it's considerably undervalued.”
The tariff proposal is another area of contention in the two countries' trade relationship. In March,the United States started a complaint with the World Trade Organization over a Beijing import tax on U.S. semiconductors.
The trade organization handles government-to-government disputes,but the settlement process can take several years. Sen. Susan Collins,R-Maine,the bill's other sponsor,said the proposal would give American manufacturers a faster way to challenge subsidies.
In a letter to Collins supporting the bill,Wendy Lechner,senior director for federal policy at the Printing Industries of America Inc.,said,“The balance becomes lopsided when certain countries improperly subsidize exports to the disadvantage of others. If we are not able to respond through international law,there is nothing to prevent continued subsidization that harms American manufacturers.”
A spokesman for the National Association of Manufacturers,which describes itself as the largest representative of manufacturers in the country,said there are a number of similar bills before Congress and that the group has not endorsed this one.