Transcripts

The U.S. Trade Policy With China Changes

SUSIE GHARIB: A major trade policy shift today between the U.S. and China. The Bush administration announced new duties on imports from China to compensate for subsidies enjoyed by Chinese exporters. This is the first time in 23 years the U.S. has slapped import duties on a country that does not have a mature free market economy. The first target of the new law will be paper imports from China, but American steel companies and textile producers, who also face competition from the Asian nation, could soon ask for trade protection as well. Washington bureau chief Darren Gersh reports.

DARREN GERSH, NIGHTLY BUSINESS REPORT CORRESPONDENT: The import duties would apply to the glossy paper used to print catalogues and magazines. Those paper imports from China tripled last year, and the Commerce Department says they were heavily subsidized. Commerce secretary Carlos Gutierrez says new tariffs will insure trade with China is fair trade.

CARLOS GUTIERREZ, COMMERCE SECRETARY: This is a step in that direction and this is a tool that we can use and that we are very willing to use when we have the opportunity.

GERSH: After a four month investigation, the Commerce Department concluded the Chinese government provided paper makers with subsidies ranging from discounted loans, to loan forgiveness, tax incentives and export subsidies. The Commerce Department slapped tariffs of 10.9 percent and 20.3 percent on the two largest Chinese paper producers. Importers will now have to deposit those tariffs with customs officials, but the duties aren't likely to become final until October. Manufacturers in the U.S. have been pushing for years for the Commerce Department to bring a case like this and the National Association of Manufacturers Frank Vargo says it's an important precedent.

FRANK VARGO, VP INTERNATIONAL, NATIONAL ASSOCIATION OF MANUFACTURERS: China has so many subsidies. It is so common to hear our members say the Chinese product is being delivered in the United States for less than the cost of the raw materials in China. So that means there are subsidies and up to now there's been no way to deal with them. So people are going to look at the outcome of this case. Maybe they're going to wait and see what the courts do, and if it makes it all the way through, I think we'll see more cases.

GERSH: Trade lawyer Daniel Porter represents the Chinese government and calls today's decision illegal and unfair. The Commerce Department is still pursuing an anti-dumping case against the Chinese paper makers using special trade rules for non-market economies. Porter says today's case used a different section of the law, which means the U.S. is trying to punish the Chinese twice.

DANIEL PORTER, TRADE LAWYER, VINSON & ELKINS: Those special rules take into account that the Chinese exporters may be subsidized by the Chinese government. If you then apply countervailing duties to account for the subsidies that they've received, you're double counting the tariffs. You're double counting the duties.

GERSH: Republican and Democratic members of Congress have introduced legislation that to push the Bush administration to bring more anti-subsidy cases against China, but the Commerce secretary says today's action shows he already has the power he needs to level the playing field. Darren Gersh, NIGHTLY BUSINESS REPORT, Washington.