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USTR Details Stricter China Plan

Talking tough on China, USTR Rob Portman outlined a new policy toward the country that focuses on better enforcement of trade laws.

WASHINGTON — Talking tough on China, U.S. Trade Representative Rob Portman outlined a new policy toward the country that focuses on better enforcement of trade laws.

“Our U.S.-China trade relationship today lacks equity, durability and balance in the opportunities it provides,” Portman said at a press conference Tuesday, where he outlined a top-to-bottom review of the trading relationship.

“We are entering a new phase of our trade relationship with China,” he said. “China should take on responsibilities commensurate with its economic heft and the benefits it currently derives from the global trading system.”

Portman said China subsidizes some of its industries, refuses to fully open its markets and does not properly enforce intellectual property rights.

The report calls for changes at the USTR’s office, including a new China Task Force headed by a chief counsel for China Trade Enforcement, increased capability to gather information to assess the trading relationship and an expanded presence in Beijing. It also recommends closer cooperation with other countries in addressing China issues and other ways to increase U.S.-Sino dialogue on trade.

U.S. textile producers routinely claim these and other practices, such as currency controls, make it impossible to compete with China. Industry representatives and Congressional Democrats said Tuesday that the report, which offered no new sanctions against China, did not go far enough in addressing the trading imbalance.

“We know there are problems,” Rep. Ben Cardin (D., Md.), said in an interview. “We know they are manipulating their currency. We know they are not enforcing intellectual property rights and we know they are not complying with the agreements within the WTO. What we’re looking for is action and steps leading to action and we see nothing in this review that has us believe there is anything new.”

Matthew Beck, co-director of communications for the Democratic staff on the House Ways & Means Committee, contended the new task force and chief counsel “amounts to shifting around boxes on a bureaucratic chart.”

“There is no indication this will be a new position, no indication the person will do only China trade cases … [and] no indication what the mandate for this position would be,” he said in an e-mail.

A spokesman for the American Manufacturing Trade Action Coalition said the report fails to identify enough areas where the U.S. could be more assertive in addressing China on trade issues. He said, “Our policy with China is too much carrot, too little stick.”

Sen. Chuck Grassley (R., Iowa), chairman of the Senate Finance Committee, welcomed the report and said, “There’s been a growing impatience in Congress with China’s slowness in addressing key issues, such as currency reform and the enforcement of intellectual property rights.”

Grassley, who refrained from endorsing specific legislation on China until he reviewed the report’s findings, said in a statement he is developing “a comprehensive legislative approach for China and the rest of the world.”

Portman acknowledged that actions he outlined would not directly impact the trade deficit with China, which ballooned to a record $201.6 billion last year.

“The trade deficit is primarily based on macroeconomic factors that cannot be directly affected by the trade policies we’re talking about today,” said Portman, attributing the deficit in part to a low U.S. savings rate.

Julia Hughes, vice president of international trade at the U.S. Association of Importers of Textiles & Apparel, said, “Many of the market opening and positive recommendations for expanded dialogue aren’t really going to apply for us until we get to 2009,” when the U.S.-China import restraint agreement for apparel and textiles expires.