JUNE 2003 VOL. 13, NO. 3

InsideWashington

by Janet Kopenhaver, AWPA Director of Government Affairs

TRADE

• President Rejects Second Safeguard Request
  The White House rejected a petition for relief under the China-specific safeguard filed by domestic wire coat hanger manufacturers. It was determined that providing import relief would have an adverse impact on the US economy, specifically on thousands of small, family-owned drycleaning businesses. The administration felt that imposing additional tariffs would affect domestic producers unevenly and that most domestic producers had already begun to pursue adjustment strategies. The ruling also indicated that there is a strong possibility that if additional tariffs on Chinese wire hangers were imposed, production would simply shift to third countries, which could not be subject to section 421's China-specific restrictions.

  This is the second time relief has been sought under the safeguard provision that the Chinese negotiated as part of their accession to the WTO in 2001. The first request, regarding pedestal actuators was also rejected by the Administration. In both cases, the International Trade Commission (ITC) had ruled that there was cause for action to protect the domestic industry against import surges of Chinese products. In the hanger case, the ITC ruled unanimously in favor of relief.

• Hearing on China
  The House Appropriations Subcommittee on the Departments of Commerce, Justice, and State, the Judiciary, and Related Agencies held a hearing recently to discuss the effect imports from China have on US companies. Subcommittee Chairman Frank Wolf (R-VA) stated at the outset that he was not trying to rewrite U.S. trade policy, but instead determine whether funding to the Administration is enough to help small and medium-sized businesses deal with imports from China. After briefly discussing topics ranging from human rights to socks made with prison labor, Wolf promised that he will do everything he can to take care of the China issue.

  Almost all the panels that testified (Manufacturing, Chemicals/Pharmaceuticals, Agriculture, and Textiles) basically complained that Chinese imports were hurting their businesses. The testimony from these witnesses pretty much evolved into an attack on the Department of Commerce and how it handled their particular antidumping cases. Complaints included Commerce using the wrong surrogate country, which led to lower AD duties; Chinese producers providing false information to Commerce which led to single-digit AD duties (while Mexico and the EU assessed AD duties around 50 percent); Chinese companies smuggling in chemicals covered under AD orders in containers marked "tools and toys;" and Chinese companies exporting huge amounts of covered products while Commerce conducts new shipper reviews.

  Assistant USTR Peter Allgeier, Commerce Undersecretary Grant Aldonas, and Deputy Commissioner of Customs Douglas Browning comprised the government panel. Aldonas acknowledged there could be better coordination between Commerce, Customs, and even the Department of Justice when it came to enforcing the AD duties and going after those who purposely provided false information, transshipped covered products, or smuggled covered products to avoid dumping duties.

  Finally, Rep. Mollohan (D-WV) grilled the government panel on the Byrd Amendment. He asked Browning about a recent report from the Department of Homeland Security Inspector General about problems collecting and distributing Byrd Amendment money. Browning said that problems were found with roughly 5 percent of the total money distributed last year (about $500 million). He said that there is approximately $90 million in unliquidated/uncollected payments and there have been problems with overpayments. Customs hopes to have all the overpayments collected in June and all the changes and fixes implemented by December 2003.

  Mollohan then asked Allgeier and Aldonas about the President's budget that called for a repeal of the Byrd Amendment. Mollohan said this contradicts what the US has said before the WTO in Geneva, and that if the President does not want to repeal the Byrd Amendment, then the Administration must send an amended budget request to Congress. He tried to get Allgeier and Aldonas to go on the record saying either the Administration does not want to repeal Byrd or that it will send an amended budget request. Aldonas simply said that he would discuss that with the Office of Management and Budget (OMB).

• WTO Authorizes EU Sanctions
  At a special Dispute Settlement Body meeting, the WTO authorized the European Union to impose more than $4 billion in annual, retaliatory sanctions against the US as a result of the WTO's Foreign Sales Corporation (FSC) case. EU Trade Commissioner Pascal Lamy immediately responded by confirming what most had widely believed - that the EU will hold off on the imposition of sanctions until the end of the year.

  However, Lamy did state that the EU has laid down a January 1, 2004 ultimatum to bring itself into compliance with the ruling or face punitive tariffs on US exports. He will assess congressional efforts to pass legislation addressing the FSC issue this fall, and if there is no sign that compliance is on the way at that time will trigger the EU process for retaliation.

• USTR Publishes Trade Report
  The US Trade Representative (USTR) has published the 2002 National Trade Estimate Report on Foreign Trade Barriers, which contains an inventory of the most important foreign barriers affecting US exports of goods and services, US foreign direct investment, and protection of intellectual property rights. The latest USTR listing of foreign trade barriers can be accessed at www.ustr.gov/reports.

ENVIRONMENTAL

• EPA - A Cabinet Level Agency?
  The US Environmental Protection Agency (EPA) would undergo a significant overhaul in the way it operates and manages the nation's environmental laws if a bill introduced by a key House member becomes law by promoting the agency to Cabinet-level status.

  Rep. Doug Ose (R-CA), Chairman of the House Government Reform Energy Policy, Natural Resources and Regulatory Reform Subcommittee unveiled his bill (HR 2138) recently. President Bush and his top environmental officials have consistently offered their support to legislation that would make EPA a part of the White House Cabinet.

  Ose's bill would reorganize EPA from its existing structure, which focuses on program offices in various media (i.e., air, water, land) or pollution source (i.e., pesticides, radiation, waste). Instead, HR 2138 would center EPA around more broad goals by creating an Office of Policy, Planning and Innovation, an Office of Science and Information, and an Office of Implementation, Compliance and Enforcement. The policy office would serve as the centralized locale for all major policy and regulatory decisions. Within the science office, EPA would establish a Bureau of Environmental Statistics to collect, compile and analyze data to inform the department and public about the state of the environment. The implementation office would oversee regional environmental efforts.

  Several previous attempts to elevate the agency have been made, but ultimately each has been rejected because of other problems with the legislation.

LEGISLATION

• Steel Bill for Retirees
  Members of the Congressional Steel Caucus introduced a bill - HR 1999, the Health Care Tax Credit Enhancement for Workers and Steel Security Act of 2003, that would expand a program created in last year's "fast track" trade negotiating bill that helps American retirees displaced by international trade. Currently, non-Medicare-eligible retirees ages 55 to 64 whose benefits have been assumed by the federal Pension Benefit Guaranty Corporation, including many steel workers, can receive a 65% health care tax credit after paying for their own benefits for three months. This bill would make these benefits available immediately and lower the eligibility from age 55 to 50.

  It also would extend the President's steel 201 program until March 6, 2010 - five years later than in the original proclamation.

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