By and  on April 2, 2007

WASHINGTON — The U.S. Com­merce Department's decision to impose countervailing duties on glossy paper imported from China — reversing a 23-year-old policy — might be a prelude to similar actions involving the apparel industry.

Countervailing duties are intended to offset unfair subsidies given to foreign producers. The duties had not been applied to nonmarket economies such as China and Vietnam because the U.S. was unable to determine the precise impact of subsidies in the highly controlled economic systems in those countries.

Commerce Secretary Carlos Gutierrez said at a news conference on Friday that it is now possible to determine the effects of subsidies in the Chinese economy because that nation has modernized its policies.

"We are demonstrating our continued commitment to create an environment of true competition for American manufacturers, for workers and farmers," Gutierrez said in announcing the countervailing duties. "This decision, however, does not signal any retreat from economic engagement with China. Rather, it speaks to the growing strength of our commercial relationship."

The Chinese government sounded a defiant tone.

"This action of the U.S. side goes against the consensus reached by the leaders of both countries to resolve disputes through dialogue," said Wang Xinpei, spokesman for China's Ministry of Commerce, according the Xinhua News Agency, the country's official news service. "China strongly requires the U.S. side to reconsider the decision and make prompt changes."

China's currency policies, which domestic producers and many in Congress say undervalue the yuan and confer an unfair advantage because it lowers the cost of exports, were not a factor in the case.

There are various efforts in Congress to expand the antisubsidy laws, including one that would let them be used to counteract currency manipulation.

The preliminary determination in the paper case set duty rates at 10.9 percent to 20.4 percent, depending on the level of subsidy a company is receiving. A final decision is scheduled for October.

A U.S. firm may only petition the Commerce Department to bring a countervailing duty case involving imports of goods that are in direct competition with it. The industry, however, might figure out a way to take advantage of the change by getting the administration itself to initiate a case, rather than a company."The ability to help our industry is still limited,'' said Auggie Tantillo, executive director of the American Manufacturing Trade Action Coalition, which lobbies for U.S. textile interests.

Still, the action presents domestic producers with a potential precedent to fight imports from China.

"It's good news," said Cass John­son, president of the National Council of Textile Organizations. "There's now a precedent for us to go to the government and say, 'If China is subsidizing its apparel industry, self-initiate a CVD [countervailing duties] case."

On Capitol Hill, the administration's action did not diminish the push for a legislative fix of the countervailing duty laws.

"We plan to move forward with bipartisan legislation introduced by Representatives [Al] Davis [D., Ala.] and [Phil] English [R., Pa.] to ensure we are combating all unfair trade, whether it is dumping or subsidies, that puts American workers, farmers and businesses at a disadvantage," said House Ways & Means chairman Charles Rangel (D., N.Y.) and Rep. Sander Levin (D., Mich.), chairman of the trade subcommittee, in a joint statement. "Changing the law will remove any doubt or court challenge to make certain that every industry can file a case if they have been harmed."

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