House Expected to Consider China Trade Enforcement Bill by End of July 2005

Congressional sources have confirmed that the House of Representatives is expected to consider H.R. 3283 during the week of July 25, 2005.

Highlights of H.R. 3283 include (partial list):

a. Authorize application of CV duty law to nonmarket economies. H.R. 3283 would authorize the application of U.S. countervailing (CV) duty law to exports from nonmarket economies such as China by amending 19 USC 1671(a)(1) to include nonmarket economy country every time that section of the statute refers to "country."

b. Suspend "New shipper" AD bonding privileges for three years. H.R. 3283 would suspend for three years the availability of bonds for new shippers in antidumping (AD) cases and instead require cash deposits. According to H.R. 3283, clause (iii) of 19 USC 1675(a)(2)(B)(iii) shall not be effective during the three year period beginning on the date of the enactment of H.R. 3283. In addition, H.R. 3283 requires, not later than two years after the date of enactment, the Treasury Secretary, in consultation with others, to submit to Congress a report containing (a) recommendations on whether the suspension should be extended beyond the three year period provided for in the act, and (b) assessments of the effectiveness of any administrative measures that have been implemented to address the difficulties giving rise to the suspension.

c. Amend the definition of "countervailable subsidy." H.R. 3283 would amend the definition of countervailalbe subsidy in 19 USC 1677(5)(E) by adding the following language at the end of the section on benefits conferred:

"with respect to the People's Republic of China, if the administering authority encounters special difficulties in calculating the amount of a benefit under clause (i), (ii), (iii), or (iv) of this subparagraph, the administering authority may use methodologies for identifying and measuring the subsidy benefit which take into account the possibility that prevailing terms and conditions in China may not always be available as appropriate benchmarks. When applying such methodologies, the administering authority should adjust such prevailing terms and conditions before considering the use of terms and conditions prevailing outside China."

d. Prohibit double counting of CV subsidies in AD duty orders, etc. H.R. 3283 states that in applying 19 USC 1671(a)(1), as amended by c. above, to a class or kind of merchandise of a nonmarket economy country, the administering authority shall ensure that (a) any countervailable subsidy is not double counted in an AD duty order under 19 USC 1673 on the same class or kind of merchandise of the country; and (b) the application of 19 USC 1671(a)(1) is consistent with the international obligations of the U.S.

(See text of H.R. 3283 for details on the effective dates for c. and d. above.)

e. Report on duty collection problems and analysis of proposed solutions. H.R. 3283 would require, not later than 90 days after enactment, the Treasury Secretary, in consultation with the U.S. Customs and Border Protection (CBP) Commissioner and Secretary of Commerce, to submit a report to certain Congressional committees describing the major problems experienced in the collection of duties, including fraudulent activities intended to avoid payment of duties, with an estimate of the total amount of uncollected duties for the previous fiscal year and a breakdown across product lines describing the reasons duties were uncollected. According to H.R. 3283, this report shall also make recommendations on additional actions to address remaining problems related to duty collections, etc.

f. Comprehensive monitoring of China's compliance with its trade obligations on intellectual property rights, market access for exports of U.S. goods, services, and agriculture, and accounting of Chinese subsidies. H.R. 3283 would require the U.S. Trade Representative and the Secretary of Commerce to undertake to ensure that China has taken certain specified steps to comply with its international trade obligations regarding intellectual property rights, market access for U.S. goods, services, and agriculture, and the accounting of Chinese subsidies.

H.R. 3283 states that if the President determines that China has not met each of the obligations regarding its compliance with its intellectual property rights obligations outlined in H.R. 3283, or taken steps that result in significant improvements in intellectual property rights protection in accordance with its trade obligations, then the President shall assign such resources as are necessary to collect evidence of such trade agreement violations for use in dispute settlement proceedings against China in the World Trade Organization (WTO).

H.R. 3283 would require either (a) not later than six months after enactment, and every six months thereafter, or (b) not later than 30 days after enactment and every 30 days thereafter (for obligations to be met by the end of 2005), the President to submit to Congress a report that contains a description of the specific steps taken by China to meet the specified intellectual property rights protection and market access obligations, an analysis of the extent to which Chinese officials are attempting in good faith to meet such obligations; and a description of the actions, if any, the President will take to obtain compliance by China if the President determines that China is failing to meet such obligations.

g. Report on currency manipulation by foreign countries. H.R. 3283 would require, not later than 60 days after enactment, the Secretary of the Treasury to submit to Congress a report that defines currency manipulation and describes actions of foreign countries that would be considered currency manipulation; and describes how statutory provisions addressing currency manipulation by trading partners of the U.S. contained in, and relating to, specified statutes can be better clarified administratively to provide for improved and more predictable evaluation.

h. Authorization of FY 2006-2007 appropriations for USTR and ITC. H.R. 3283 would authorize fiscal year (FY) 2006 and 2007 appropriations for the Office of the U.S. Trade Representative and the International Trade Commission (ITC). H.R. 3283 would also authorize specific FY 2006 and 2007 amounts for the USTR to appoint additional staff or enhanced activities by its Office of the General Counsel, the Office of Monitoring and Enforcement, the Office of China Affairs, and the Office of Japan, Korea, and APEC Affairs.

i. ITC study on trade and economic relations with China. H.R. 3283 would require the ITC to carry out a comprehensive study on trade and economic relations between the U.S. and China which focuses on China's macroeconomic policy, including its fixed exchange rate policy, the competitiveness of its industries, the composition and nature of its trade patterns, and the impact of these elements on U.S. trade account, industry, competitiveness, and employment.

Representative Rangel and Others Introduce Separate China Bill

On July 14, 2005, Charles Rangel, Ranking Democrat on the House Ways and Means Committee, and other democrats introduced a separate China bill entitled the "Fair Trade with China Act of 2005" (H.R. 3306).

H.R. 3283 available at http://frwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?dbname=109_cong_bills&docid=f:h3283ih.txt.pdf.

Representative English's press release on H.R. 3283 (dated 07/14/05) available at http://www.house.gov/apps/list/press/pa03_english/Chinasos0705.html,

H.R. 3306 available at http://frwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?dbname=109_cong_bills&docid=f:h3306ih.txt.pdf.