Panel Urges Action vs. China on Trade

By FOSTER KLUG
The Associated Press
Saturday, October 28, 2006; 4:17 AM

WASHINGTON -- A congressional advisory panel's draft report is urging lawmakers to push for tough action against China on two festering trade disputes: intellectual property protection and Washington's view that China's currency is undervalued.

Recommendations in a draft of the annual report by the U.S.-China Economic and Security Review Commission, obtained by The Associated Press, deal with complaints by American manufacturers that Beijing's artificially low currency makes Chinese goods cheaper in the United States and American products more expensive in China.

U.S. lawmakers and companies also say a flood of pirated movies, computer programs and other copyrighted material in China has cost thousands of American jobs and hindered the U.S. economy's ability to compete.

Congress should urge the Bush administration to press complaints against China at the World Trade Organization for what the panel called a massive intervention by Beijing in international currency markets, the report said. The commission is calling for another WTO case against China for what it said was a failure to enforce intellectual property rights.

Another major recommendation is that Congress define currency manipulation as an illegal export subsidy and allow strong penalties against an offending country's export goods.

Congress created the panel in 2000 to investigate and report on U.S.-China relations. Its latest report, which also touches on security, energy and military issues, comes up for its final vote Monday and will be released in its final version Nov. 16.

The results of the Nov. 7 congressional elections Nov. 7 could have a big influence on U.S. trade policy. Top critics of Beijing's economic practices have come from both parties, but Republicans have been more inclined to support Bush's free trade initiatives than Democrats.

Last month, Bush asked lawmakers to scrap a vote on a bill that would have leveled a 27.5 percent tariff on Chinese products coming into the United States unless China revalued its currency upward. Lawmakers agreed, but promised to renew efforts next year to spur Beijing to change its currency policies.

Punitive action against China at the WTO is considered one of America's most powerful weapons. A formal WTO complaint could lead to strict sanctions if the U.S. wins its case. If the WTO should rule against the United States, however, analysts say it could send a message to Beijing that its current approach is sufficient.

Chinese leaders have said they plan to eventually let their currency trade freely on world markets, but doing so immediately would cause financial turmoil and damage the Chinese economy.

China also has committed to take stronger action against producers of pirated goods.


© 2006 The Associated Press