Congressional Steel Caucus Wants Obama to Take Action Against Non-Market Economies

By Elizabeth Brotherton-Bunch
Sep 08 2016 |
The United States and China hold a bilateral meeting in Hangzhou, China on Sept. 3. | Photo by White House photographer Pete Souza

Caucus asks Obama to use “full and effective application” of trade laws against NME countries.

Members of Congress are back in Washington after their summer recess, and they don’t plan on staying too long before heading back out on the campaign trail. But before they leave, a bipartisan group of Members want to do something about non-market economy (NME) nations like China.

Congressional Steel Caucus Chairman Tim Murphy (R-Pa.) and Vice Chairman Pete Visclosky (D-Ind.) introduced a House resolution this week calling on the Obama administration to use “effective trade remedies” against non-market economy countries and “retain the status of any country currently designated as a nonmarket economy country until it demonstrates that it meets all of the criteria for treatment as a market economy.”

There are several countries that have NME status, but let’s get down to business here. This resolution is about China.

If you read this blog regularly, you know that China’s massive industrial overcapacity is causing problems worldwide and had led to layoffs and plant closures here in the United States. It's up to China to fix things, as its government-owned industrial facilities are fueling the problem by producing way more steel, aluminum, cement and other commodities than the world needs.

When world leaders gathered in China over the Labor Day weekend for a meeting of the G20, in fact, this was one of the big things they talked about.

Meanwhile, China desperately wants to be named a market economy.

When China entered the World Trade Organization (WTO) back in 2001, it agreed to be called a “non-market economy,” which recognizes that its government plays a major role in its economy — and makes it easier for other countries to challenge its trading practices at the WTO. The agreement included a 15-year limit, at the end of which China’s NME status would be re-evaluated by individual WTO nations. China thinks it's entitled to be named a market economy once the 15-year period ends in December and really wants that recognition.

China is not a market economy. Its industrial overcapacity problem is proof of that. And if China is given market economy status, it would be a lot harder for the United States and others to take action against China’s trade cheating.

That brings us back to the House resolution, which has four main action items, including:

  1. Calling on the Obama administration to “provide for the full and effective application of United States anti-dumping and countervailing duties” against NME countries;
  2. Asking Obama to retain NME status for all NME nations until they meet all market economy criteria according to U.S. law;
  3. Urging NME nations to eliminate direct and indirect subsidies and other “market-distorting government policies benefitting the production and export of goods to the United States";
  4. Calling on NME nations to enter into binding and enforceable agreements to reduce excess capacity and withdraw state intervention in their economies.

Twenty-three bipartisan members of Congress joined Murphy and Visclosky as original cosponsors of the resolution. Murphy said that the goal to address the inequities faced by American workers and manufacturers who are forced to compete on an unfair playing field.

“Hardworking American workers continue to pay the price for not taking action to hold China, and other foreign competitors, accountable for their clear abuse of U.S. trade laws,” he said. “Millions of dollars go uncollected, thousands of jobs are lost, and American industries continue to suffer. This is unacceptable.”

Added Visclosky: “It is past time that action is taken to stop the illegal trading practices of China and other non-market economy countries.”

Manufacturers for Trade Enforcement, a coalition of U.S. industry groups (including the Alliance for American Manufacturing [AAM]), announced its support of the resolution.

“For years China has promised to make changes to its state-sponsored economy, and for years Beijing has played by its own rules instead,” said AAM President Scott Paul. “We want to commend the Congressional Steel Caucus leadership for looking out for our manufacturing workers by offering this important resolution.”