Bloomberg News

Congress Set to Pass Bill Preserving Tariffs to Offset Chinese Subsidies

March 05, 2012

The U.S. House is set to vote today on bipartisan legislation letting the Commerce Department apply duties to offset government subsidies in nations such as China (TBBLCHNA), a day after the Senate passed a similar measure.

The bill responds to a Dec. 19 decision by a U.S. appeals court in Washington that said existing law doesn’t authorize the agency to set tariffs on goods from countries lacking a domestic market to establish prices.

Passage in both chambers would mark a rare achievement by a divided Congress that has yielded few accomplishments since Republicans took control of the House last year.

“We’re backing American workers and businesses in the fight against China’s unfair trade practices,” Senator Max Baucus, a Montana Democrat who leads the Finance Committee, said in an e-mailed statement with John Thune of South Dakota, the senior Republican on the committee’s trade panel. “China doesn’t get a free pass to violate the rules at the expense of American jobs.”

The legislation, sponsored by the two lawmakers, would overcome a court’s challenge of a policy, in place since President George W. Bush’s administration, that led to U.S. duties on undervalued imports of about two dozen Chinese products. Companies that have benefited from duties include U.S. paper and steel manufacturers. Since 2007, the policy helped protect an estimated 80,000 U.S. jobs, Baucus and Thune said in a statement.

House Legislation

Republican Representatives Dave Camp of Michigan, chairman of the House Ways and Means Committee, and Kevin Brady of Texas, as well as Sander Levin of Michigan, the senior Democrat on the committee, and Jim McDermott, a Washington Democrat, co- sponsored the House version.

The House and Senate have been riven in the past year by partisan battles over spending, which brought the U.S. to the brink of government shutdowns four times last year. Debate on steps to cut the deficit collapsed in November.

This year, Congress extended a payroll tax cut through December, though lawmakers in both parties say little else may get done besides bills funding federal agencies.

The public’s contempt for Congress has grown amid the inactivity. Last month, the Gallup Poll registered the lowest- ever approval rating for Congress, with just 10 percent of Americans saying they approved of the job Congress is doing. That was down from 13 percent in a January poll and a previous low of 11 percent in December. The nationwide poll of 1,029 adults was conducted Feb. 2-5.

WTO Determination

The Club for Growth, an anti-tax advocacy group based in Washington, opposes the House bill, saying it will hurt U.S. businesses and the nation’s trade relationship with China.

“These duties restrict economic liberty and are anti- growth,” the group said in a statement to lawmakers posted on its website, warning that it will hold them accountable for their votes. “We strongly urge members of Congress to defeat this proposal.”

The countervailing duties legislation also are an attempt to resolve a World Trade Organization determination in 2011 that said a method the Commerce Department uses to determine duty margins violates U.S. international trade obligations.

U.S. Trade Representative Ron Kirk said last week that his office worked with the lawmakers on the legislation.

“It is critical to leveling the playing field for American employers and workers who face unfairly subsidized imports from countries like China.” he said in an e-mailed statement.

In December, the U.S. Court of Appeals for the Federal Circuit ruled unanimously that Commerce needed action by Congress to set tariffs on subsidized goods from nations, such as China and Vietnam, that lack a domestic market. The three- judge panel upheld a U.S. Court of International Trade decision that declared illegal tariffs on Chinese tires.

Anti-dumping duties apply to goods sold overseas at or below the price in the home country. Countervailing duties aim to offset the benefits of government subsidies to industries.

The Senate bill is S. 2153. The House bill is H.R. 4105.

To contact the reporters on this story: Eric Martin in Washington at emartin21@bloomberg.net; Laura Litvan in Washington at llitvan@bloomberg.net

To contact the editor responsible for this story: Jon Morgan at jmorgan97@bloomberg.net


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