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NAM Welcomes Quick Fix to Offset China’s Subsidies

March 05, 2012

In preparation for tomorrow’s expected vote on H.R. 4105, the National Association of Manufacturers (NAM) issued the following statement expressing strong support for defending American companies against Chinese subsidized exports.  The legislation, which affects a wide range of industries employing workers in 80 companies spanning 38 states, has the support of job-creating organizations including NAM, National Council of Textile Organizations (NCTO), the U.S. Chamber of Commerce, and the American Iron and Steel Institute (AISI).

The NAM welcomes the quick bipartisan, bicameral Congressional work in tandem with the Administration to fix a critical flaw in U.S. trade policy – the inability to defend against Chinese subsidized exports to the United States. Legislation is needed to correct a court’s finding that the Commerce Department currently lacks the authority to offset the harm done to U.S. manufacturers by these trade-distorting subsidies.  

Legislation is now being introduced in both the House and Senate to solve that problem, and this legislation needs to be passed on an urgent basis.  Failure to make it plain that the Commerce Department has this authority would leave manufacturers in the U.S. defenseless against rampant deep pocket Chinese and other government subsidies.

World Trade Organization (WTO) provisions prohibit subsidies, saying subsidies should have no place in world trade.  U.S. law needs to apply equally to subsidies from non-market as well as market economies, and that’s what the new legislation would do.

Some groups have amazingly has come out against this legislation, saying it restricts economic liberty.  Being concerned about economic liberty, they should have come out strongly in support of the bills because the legislation is about removing government distortion of trade.

When China or another non-market economy provides government subsidies to promote unfair trade and take jobs away from American manufacturers, the U.S. countervailing duty laws offset that subsidy and return trade to the market-oriented basis where it should have been in the first place.  How these groups could come out in favor of Chinese subsidies and against free markets is truly baffling.

Countervailing duties aren’t anti-growth – It is Chinese and other non-market economy subsidies that are anti-growth – anti our growth.

The NAM seeks urgent Congressional action not just to allow manufacturers in the U.S. to be shielded from new subsidies, but to avoid taking away the 24 existing countervailing duty orders against non-market economies that are already in effect.  Were these orders to evaporate, hundreds – possibly thousands – of American manufacturers, including the supply chains of directly affected companies, and many thousands of workers would be put at immediate risk.

Frank Vargo is vice president of international economic affairs, National Association of Manufacturers.