USTR says China policies "hobbling" U.S. business

Reuters News
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Posted: Oct 25, 2011 2:03 PM
USTR says China policies "hobbling" U.S. business

By Doug Palmer

WASHINGTON (Reuters) - A top U.S. trade official on Tuesday criticized China for policies he said were "hobbling" American sales but did not ask for new legislative authority to confront Beijing.

"Many of these troubling policies reflect China's strengthening of state control over its economy and a retreat from its initial strong push to liberalize markets in the first years after its World Trade Organization accession," Deputy U.S. Trade Representative Demetrios Marantis said in remarks prepared for a congressional hearing.

Marantis told the House of Representatives Ways and Means Committee the Obama administration was "working day and night" to address concerns ranging from widespread piracy and counterfeiting of American goods to Chinese subsidies and industrial policies that hurt foreign firms.

"Our approach is founded on proven, vigorous enforcement and results-oriented dialogue," Marantis said, claiming the administration has already achieved some success.

The hearing comes two weeks after the Democratic-controlled Senate passed legislation to deal with Chinese currency practices that many lawmakers believe give Chinese companies an unfair price advantage.

The bill would allow the Commerce Department to impose countervailing duties on goods from countries with undervalued currencies to offset the price difference.

House Speaker John Boehner has refused to allow a vote in the Republican-controlled House on the currency bill for fear it could start a destructive trade war between the world's two biggest economies.

Other House Republicans, including Ways and Means Committee Chairman Dave Camp, have said Congress should look at the broad array of Chinese trade practices that harm U.S. business rather than just focus on currency.

Treasury Under Secretary Lael Brainard, who also was testifying before the panel, said China's currency was "misaligned" and that faster appreciation of the yuan was needed. But she said this would not erase the U.S. trade deficit.

CHARGES OF PROTECTIONISM

China has pledged to address its trade imbalance with the United States and has made some currency reforms. But many Chinese officials worry a faster rise in the yuan could hurt exports and the tens of millions of manufacturing jobs they create.

Beijing has dubbed the Senate currency bill "protectionist" and urged the White House to stop it.

Marantis told the panel the Obama administration was "alarmed" by reports that China was forcing foreign automakers to transfer valuable electric car technology to participate in China's "New Energy Vehicles."

He also criticized China for maintaining an eight-year-old import ban on U.S. beef, lavishing subsidies on its steel, chemical and other industrial sectors and restricting foreign investment in fields such telecommunications, financial services, express delivery, pharmaceuticals, mining and media.

He called China's export restrictions on numerous raw materials, including rare earths, "deeply troubling" and said discriminatory Chinese policies to promote domestic innovation remain a top administration concern.

"We know that we have a steep and difficult road ahead. For all of this, we have a plan that is comprehensive, strategic and flexible," he said.

The United States has already successfully tackled some trade barriers in the 12 cases it has brought against China at the World Trade Organization, he told lawmakers.

Washington has also made progress on a number of trade irritants in two high-level U.S.-China forums -- the Joint Commission on Commerce and Trade and the Strategic and Economic Dialogue -- that meet each year, Marantis said.

The Obama administration has a actively enforced U.S. trade remedy laws by imposing 15 countervailing duty orders and 22 antidumping orders on Chinese products since taking office in January 2009, he said.

(Additional reporting by David Lawder; Editing by Andrea Ricci)