Sun, Oct 29, 2006 - Page 11 News List

US panel urges tough action on China

DRAFT REPORT Piracy in China has cost thousands of US jobs, while the undervalued yuan makes Chinese-made products too cheap, the congressional advisory panel said

AP , WASHINGTON

A US 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 US-China Economic and Security Review Commission, obtained by AP, deal with complaints by US manufacturers that Beijing keeps its currency artificially low, making Chinese goods cheaper in the US and US products more expensive in China.

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

Congress should urge the Bush administration to press complaints against China at the WTO 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 exports.

Congress created the panel in 2000 to investigate and report on US-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 US 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.

Bush last month asked lawmakers to scrap a vote on a bill that would have imposed a 27.5 percent tariff on Chinese products coming into the US 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 US wins its case. If the WTO should rule against the US, 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.

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