Congress Daily: Business Groups Holding Back On China Trade Legislation

Congress Daily
Business Groups Holding Back On China Trade Legislation
July 11, 2007
By Martin Vaughan

Business groups are keeping a wary eye on proposals that would authorize trade sanctions against China and other countries that manipulate their currencies, but are waiting to mount a concerted opposition until it becomes clearer what approach Democrats will pursue.

A possible markup this month in the Senate Finance Committee of legislation that could lead to increased antidumping duties on Chinese goods to reflect currency imbalances might focus multinational firms' attention.

But as long as it remains unclear what, if anything, will come out of Congress on China, lobbyists have more than a few good reasons to stay out of the fray.

You don't want to spend too much capital opposing something that isn't going anywhere," said one senior trade lobbyist.

Part of the reason the outcome of Senate action is unclear is because two key chairmen -- Senate Finance Chairman Baucus and Banking Chairman Dodd -- have introduced competing legislation, and will have to settle their differences before the full Senate moves forward.

A leading House proposal would treat currency manipulation by China and others as an export subsidy, and allow the application of countervailing duties, as with other types of subsidies.

Also, while committee chairmen in the House and Senate have expressed eagerness to take on currency legislation affecting China and Japan, signals from leadership have been less clear. "A lot of the fall is going to be spent on Iraq and appropriations. This could easily be crowded out by other stuff," another lobbyist said.

Those groups that are lobbying on the China issue are touting the benefits to the United States of more open trade with the world's fastest growing economy, rather than going after any particular proposal.

We're touting the benefits of trade with China, more than our concerns with individual provisions. We're not up on the Hill bashing any particular bill," said Brian Peters, a trade lobbyist for the Information Technology Industry Council.

Groups that include the U.S. Chamber of Commerce, Emergency Committee for American Trade, and the U.S. China Business Council have been meeting with congressional offices emphasizing the benefits of China trade, and warning against antidotes to unfair trade that violate U.S. commitments at the World Trade Organization. "The key issue that will be debated and have a major impact on the process is -- whatever is proposed -- will it pass muster in the WTO?" said Calman Cohen, President of ECAT. "The worst thing that the United States could do trying to solve a problem is to create another problem."

The China Business Council is shopping a study showing the growth in exports to China in this decade, and export volumes in selected sectors, from each of the districts represented by House Ways and Means Committee members.

But the focus of many business groups remains pushing for enactment of the four trade agreements pending before Congress.

Other issues coming up about antidumping and countervailing duty statutes -- those will get increasing attention. But it won't answer the question of what we can do to advance our commercial interests abroad," said Cohen.

Trade Representative Schwab offered a pep talk of sorts to top lobbyists at the White House Tuesday, business sources said.

Schwab urged them to keep the pressure on for consideration of trade deals with Peru, Colombia, Panama and South Korea, despite House Democrats' announcement late last month that action will be delayed for weeks -- in the case of Peru and Panama -- or indefinitely, in the case of Colombia and South Korea.

Deputy Assistant to the President Barry Jackson and National Security Council economic adviser Daniel Price also participated in the meeting, sources said.

Administration officials have also chosen so far not to wade into Democrats' China debate, and as long as legislation is far from becoming a reality, they might be happy to let the waters churn.

There is value in going to the Chinese and saying, 'look what Congress is prepared to do,'" said one source close to the administration. "Is there an opportunity for Treasury to use that as leverage?"