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Sat, Feb 11, 2006 - Page 12 News List

US may end China's trade status

`CHINA CHEATS' A new bipartisan measure accuses China of piracy, currency manipulation, labor law violations and obstructing the entry of US products

AFP , WASHINGTON

Two US senators proposed legislation on Thursday that would repeal permanent normal trade relations (PNTR) status for China, citing Beijing's alleged unfair trade practices and a rocketing US trade deficit.

The US Congress granted China the PNTR status in 2000, which paved the way for the most populous nation to enter the WTO and for US businesses to deal more seamlessly with Beijing.

But senators Byron Dorgan and Lindsey Graham, co-authors of the bipartisan measure, said the status should be rescinded in retaliation for China's unfair trade practices which they said were responsible for the huge US trade deficit, which could surpass US$200 billion for last year.

They cited practices including piracy, currency manipulation, violation of its own labor laws, and barriers to prevent US products from entering the Chinese market.

"There's nothing normal or fair about any of these methods," Dorgan, the Democratic senator from North Dakota, told a joint news conference with Graham, a South Carolina legislator from US President George W. Bush's Republican Party.

"I think we have reached the tipping point on the issue of China. It cheats in a way that hurts this country," he said.

Graham acknowledged the legislative action was "drastic in the sense of politics" but added: "I think it's necessary in the sense of business."

The PNTR status, he said, should only be granted to China on an annual basis subject to progress on reforms that are scrutinized by Congress.

The lawmakers did not say when they plan to debate or push for a vote on the bill but the move comes as US President George W. Bush prepares to welcome his Chinese counterpart, Hu Jintao (胡錦濤), in April.

Cautioning the lawmakers, US Trade Representative Rob Portman said any decision to withdraw the PNTR from China could have a boomerang effect.

"To me it would do nothing to help with the trade deficit, in fact the reverse, relative to China," Portman told reporters after talks with the members of the Senate Agriculture Committee.

Graham is behind another similar bipartisan measure that would force China to revalue its currency or face higher tariffs on Chinese imports.

The legislation, to impose a 27.5 percent tariff across the board on Chinese imports, has good support in Congress, lawmakers say.

"There is nothing normal about the way China manages its currency. They manipulate their currency to get an economic advantage over the world, not just the United States, and the world is telling China, `end your manipulation practices and allow your currency to go to its market value,'" Graham said.

After months of intense US pressure, China freed the yuan from an 11-year-old peg to the US dollar in July last year, revaluing it by 2.1 percent and putting it in a trade-weighted basket of currencies. The yuan was also allowed to move 0.3 percent either way on any given day.

But legislators and businesses in the US say the yuan remains undervalued and continues to sink the country's trade balance deeper into the red.

Portman pointed out that China was a vital market for the US.

It is the biggest US export market in terms of growth, averaging around 15 to 20 percent over the last two years, among large economies, he said.

"It's been a great export market for us, and part of that is because they're now in the WTO, we're able to not only seek lower tariffs ... [and] we should not lose sight of the fact that in the export side it's created a lot of jobs in the US," he explained.

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