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Alliance for American Manufacturing

11/19/2019 | News release | Distributed by Public on 11/19/2019 13:11

New Bipartisan Legislation Aims to Make it Tougher for China to Dodge Trade Laws

Play by the Rules Act is designed to give the Commerce Department more flexibility to act.

Sens. Tammy Baldwin (D-Wis.), Shelley Moore Capito (R-W. Va.), Debbie Stabenow (D-Mich.) and Bill Cassidy (R-La.) introduced a new bill on Tuesday to 'crack down on unfair trade cheating from nonmarket economies like China.'

O.K., we know: We need to be more specific here.

The Senators want to give the Commerce Department more power to hold China and other countries accountable when they evade anti-dumping (AD) and countervailing duties (CVD).

For those unfamiliar with this area of U.S. trade law, the United States issues AD/CVD duties when imported products are found to be sold below market value or to have received significant government subsidies when being produced. The idea is to level the playing field a bit for American workers and companies, who operate in a free and open market.

As the Senators note, AD/CVD rules are pretty common, and most countries follow them without issue. But nonmarket economies - especially China - work overtime to dodge these duties, engaging in 'a sophisticated and government-backed effort to avoid by the duties required.'

For example, China 'alters their products slightly to get around the rules, violating the spirit of the law, if not the letter.' It isn't individual Chinese companies doing this, remember: China uses 'its vast government resources' to ensure these firms are able to evade U.S. trade laws and avoid the duties.

This new legislation is designed to allow the U.S. to better respond to this cheating and stand up for American workers and businesses who play by the rules. Politico reports :

'The proposed legislation would give the Commerce Department 'additional flexibility' when reviewing anti-circumvention petitions… The bill would allow Commerce to include any product that is interchangeable with a product that is already the subject of an anti-dumping or countervailing duty within the scope of that pre-existing order.'

There are plenty of examples out there that highlight the real-world consequences of China's expert dodging of AV/CVD duties.

Take plywood.

The Chinese government long has subsidized plywood, and Chinese companies have dumped it into the U.S. market, priced far below market value. That hurt U.S. producers and led to layoffs.

In response, the U.S. government issued anti-dumping duties on these products, and American companies were able to hire back workers in Wisconsin, Maine, Vermont, North Carolina, Oregon, Virginia, and West Virginia, according to Kip Howlett, the president of the Decorative Hardwood Association.

'But China is circumventing these lawful duties, threatening to undo our progress,' Howlett added.

Click here for more on the legislation.