Powerful members of Congress yesterday announced plans to introduce bills aimed at punishing China for some of its trade practices, making it likely that passage of such legislation will be necessary to secure approval of the controversial Central American Free Trade Agreement.
Rep. Bill Thomas (R-Calif.), chairman of the House Ways and Means Committee, threw his weight behind legislation that would allow U.S. companies to seek duties on goods found to be subsidized by the Chinese government. Thomas acknowledged that he had resisted previous versions of the bill, but was coming around in part because a few lawmakers -- notably fellow Republican Phil English (Pa.) -- were insisting on it as the price of their support for CAFTA.
"This is exactly the kind of progress that we need to be taking on the biggest trade issue the U.S. is facing," English said at a news conference with Thomas.
Thomas said the bill would be more "responsible" than earlier drafts.
Thomas's endorsement demonstrated the desire of Congress to take action against China's trade policies, and the difficulty the Bush administration and its Republican allies are having trying to get CAFTA through the House. Although the trade pact was passed by the Senate, 54 to 45, late last month, it faces a far tougher battle in the lower chamber.
On the surface, the China and CAFTA issues aren't closely related. The growing U.S. trade deficit with China and the recent bid by a Chinese firm for a U.S. oil company has fed congressional anxiety about Beijing's increasing economic muscle and outrage over practices such as keeping its currency fixed against the U.S. dollar. CAFTA, which would significantly lower trade barriers between the United States and six Latin American countries, has drawn fire for failing to protect worker rights adequately and for threatening U.S. special interests such as the sugar industry.
But House Republican leaders have been forced to confront the prospect that CAFTA might fail to secure enough votes in the House, which would be a devastating setback to President Bush's trade agenda. Lawmakers may think they have enough political "cover" to vote for CAFTA if they have also voted to punish Chinese trade practices -- or so many political analysts believe.
Thomas essentially confirmed that was his strategy. Asked if he expected a vote on the China bill before CAFTA comes to the floor in late July, he said "it is probably a good idea to do it before . . . so we let people express themselves" on the China trade issue first. He said he expected no difficulty getting House Republican leaders to accept his schedule. "I think I can persuade them," Thomas said, smiling.
Democrats, who are almost unanimously opposed to CAFTA, portrayed Thomas's statement as a sign of desperation. "The Republican leadership cannot get the votes to pass CAFTA on its own merits," said Rep. Charles B. Rangel (N.Y.), ranking Democrat on the Ways and Means Committee.
Rangel and other Democrats introduced their own anti-China bill yesterday. Linking such legislation to CAFTA "diminishes the importance of both trade matters and underscores the weakness of the Bush administration's current policy toward trade with China and the major flaws in CAFTA," said Rep. Sander M. Levin (D-Mich.).
The bill endorsed by Thomas and English, which they said was still being prepared yesterday, would authorize the Commerce Department to impose duties on government-subsidized imports from "non-market economies" such as China. Currently, imports from such countries are subject only to anti-dumping penalties, though under rules that make it easier to conclude that dumping has taken place.
English said the bill would retain the "heart and soul" of his previous drafts. Thomas said that the bill had been changed enough to make it acceptable to him.
"Compromise is at the heart of American politics," he said. "You listen to the concern and you try to accommodate it as best you're able." He added that he did not expect the administration to raise serious objections.
Neena Moorjani, a spokeswoman for the U.S. trade representative, said, "We have some concerns about the bill, but we're studying it."
The bill would also require the administration to monitor more comprehensively how China complies with its trade obligations on the piracy of goods, and other matters. In addition, the Treasury Department would be required to submit a report to Congress defining currency manipulation. Thus far, the Treasury has declined to describe China's currency policy as manipulation.
Democrats contended that their bill was tougher. It would amend trade laws "to allow U.S. action against currency manipulation and would define it as a trade violation," Levin said, adding that it also covered problems concerning China that the Republican bill did not address.
A press officer at the Chinese embassy did not return a phone message seeking comment.