AWPA Wireline - July 2007

Senate Commerce Trade Subcommittee Chairman Byron Dorgan (ND-D) held a hearing recently on whether current trade treaties have hurt US jobs. Dorgan’s premise is that trade deals have done just that. “I think the term ‘free trade’ has become synonymous with trading away America’s national sovereignty, and allowing multinational corporations to pole vault over the standards that have allowed America to develop a strong middle class; fair labor laws; a safe working environment; and clean air and water,” the Senator stated.

Dorgan invited several freshmen senators who campaigned against trade treaties to attend his subcommittee hearing. Among them was Sen. Sherrod Brown (OH-D), who beat former Republican Mike DeWine partly over the issue of trade, which Brown said has led to lost jobs in Ohio. Brown said he is seeking a new direction for trade agreements, including rescinding normal trade relations with China.

Sutton Nominated Asst Secretary of Commerce (Manufacturing and Services)

The White House announced its nomination of William G. Sutton, of Virginia, to be Assistant Secretary of Commerce (Manufacturing and Services).He most recently served as president of the Air-Conditioning and Refrigeration Institute.

Bush Announces Zoellick as World Bank Nominee.

President Bush formally nominated Robert Zoellick for a five-year term as president of the World Bank. Zoellick, currently a vice chairman at Wall Street firm Goldman Sachs, also served as Deputy Secretary of State from 2005-2006 and as the US Trade Representative from 2001-2005. Zoellick was picked to replace outgoing president Paul Wolfowitz who will remain at the Bank until June 30th. The selection of Zoellick must be approved by the World Bank’s 24-member board.

World Bank Raises China’s Growth Outlook.

The World Bank raised its forecast for China’s economic growth this year to 10.4% from 9.6% on strong first-quarter growth but it added that the nation’s economy does not appear to be overheating. The World Bank’s forecast indicates China’s 2007 growth in gross domestic product will be above 10% for the fourth straight year. In the first quarter, China’s GDP expanded 11.1% from a year earlier.”

The World Bank also “said it expects China’s exports to rise 20.6% this year, higher than the forecast it made in February for 19.8% growth. However, the bank’s latest forecast for export growth is lower than the 23.6% rise in exports last year.”

ITC Investigation of Trade Imbalance with China

The U.S. International Trade Commission announced that it will initiate a fact-finding investigation “regarding the causes of the U.S.-China trade imbalance, and whether and to what extent China uses various forms of government intervention to promote investment, employment, and exports.” The investigation was requested under Section 332 of the Tariff Act of 1930, as amended, by Representative Charles Rangel (NY-D), Chairman of the Ways and Means Committee of the US House of Representatives.

In letter to the Commission, Chairman Rangel requested that the Commission provide an in-depth assessment of the causes of the U.S.-China trade imbalance, and whether and to what extent China uses various forms of government intervention to promote investment, employment, and exports.”

Rangel’s letter also instructed the Commission to incorporate the information being collected by the Commission in its investigation “U.S.-China Trade: Driving Factors and Impediments” into this second report. Finally, the third report will analyze the role of Chinese policies, including subsidies and other interventions, in spurring changes in patterns of production and investment in the Asia region. The Chairman instructs the Commission to combine two other requested studies into the third report. One part will be the Commission’s report on “U.S.-China Trade: Implications of U.S.-Asia Pacific Trade and Investment Trends”; and the second part will be the Commission’s report on “U.S.-China Trade: Implications of China’s Deepening Integration with the Global Economy”.

In Section 332 investigations, the Commission will normally invite the public to submit comments and to testify at a public hearing. At the end of the proceeding, the Commission will submit a report of its findings to the Ways and Means Committee. Unlike antidumping or countervailing duty investigations, this investigation will not result in any actions against Chinese manufacturers or Chinese products.

Korea FTA Update

The newly-inked Korea-US trade agreement drew early bad reviews from Congressional Democrats who said the deal falls short on critical issues of market access for US autos and beef. Senator Hillary Clinton (NY-D) has said she would oppose the agreement, mostly because of its failure to open Korea’s market to American automobiles. Senate Finance Committee Chairman Max Baucus (MT-D) called the agreement “an entirely unacceptable outcome” and said he would block congressional consideration of the deal unless Korea lifts its ban on US boneless and bone-in beef. Members of both chambers of Congress have stated that they would not support the FTA unless Korea agreed to fully reopen its market to US beef.

The U.S. International Trade Commission is due to hold a hearing this month on the economic impact of the agreement. The earliest the Bush administration could submit the deal to Congress is late 2007, after the ITC delivers its report. However, it is possible that congressional action may be delayed until after the November 2008 presidential election.

US and China Sign Memorandum of Understanding on Intellectual Property

The United States and China signed a Memorandum of Understanding (MoU) on strengthened enforcement of intellectual property laws. US Customs and Border Protection (CBP) Commissioner W. Ralph Basham and Minister of Customs for the General Administration of Customs of the People’s Republic of Chin Mu Xinsheng signed the agreement that provides for exchanges of seizure information on counterfeit goods between US and Chinese customs.

Under the agreement, CBP and China Customs will increase the number of visits to the other country’s offices and ports by both policy and operational staff engaged in intellectual property rights (IPR) enforcement. The United States and China reached the agreement during the second meeting of the US-China Strategic Economic Dialogue (SED).

Inside Washington