The Select Committee on the Chinese Communist Party held a roundtable discussion in Wisconsin on Wednesday to examine how China’s trade cheating hurts American manufacturers and factory workers — and what to do about it.
The United States must update and enforce its trade laws to ensure that its manufacturers and factory workers can compete in the face of China’s unfair trade practices, witnesses told Members of Congress during a roundtable discussion in Wisconsin on Wednesday.
Sponsored by the Select Committee on the Chinese Communist Party (CCP), the event offered local manufacturers and union members the opportunity to provide a personal perspective of how China’s trade cheating has damaged both their business and the country as a whole. But it also provided a forum for participants to share their thoughts about how the United States can best fight back.
One bill that kept coming up? The Leveling the Playing Field Act 2.0, bipartisan legislation that would create new trade tools for manufacturers and workers to take on some of China’s most egregious unfair trade tactics. Included in the legislation are new mechanisms that would make it easier to address China’s country hopping to avoid U.S. duties, including by moving production to third-party countries.
“Our elected leaders need to do more to foster domestic manufacturing. It starts with smart, targeted trade enforcement to defend American workers from illegal subsidies and anti-competitive practices,” said Steve Kramer, president of United Steelworkers (USW) Local 9777, which represents members that make everything from steel to furniture to ice cream cones. “The USW is supportive of legislation that would update our trade laws, including the Leveling the Playing Field Act 2.0. We must ensure that our trade rules don’t let China content slip through other countries.”
Kramer wasn’t the only one calling for passage of the Leveling the Playing Field Act 2.0. Bob Wahlin of Stoughton Trailers — which hosted the roundtable at its factory in Stoughton, Wisconsin — told committee members that its business has been directly undermined by CIMC, a heavily subsidized Chinese state-owned company.
Stoughton Trailers has filed several trade cases to address CIMC’s trade cheating. In one case, the Commerce Department found CIMC was dumping shipping containers, but the International Trade Commission issued a negative finding, and Stoughton Trailers was forced to end its production of the containers, Wahlin recalled. China now dominates global production of those containers, Wahlin said.
But Stoughton Trailers prevailed in another trade case against CIMC, this one involving fabricated steel trailers, known as chassis, which are needed to move shipping containers. Trade relief was granted, and that led to a big increase in U.S. chassis production. Stoughton Trailers even opened a new facility in Waco, Texas and hired hundreds of new employees, Wahlin said.
He cautioned, however, that U.S. trade law must “keep up with evolving schemes.” It appears, for example, that CIMC has used Chinese subsidies to establish a facility in Thailand to avoid U.S. duties.
“We also face the issue of country hoping. U.S. industries bring successful trade remedy cases, often against China, only to see the same producers reappear in a neighboring country with the same unfair trade practices,” Wahlin said. “Trade cases are time consuming and resource intensive and domestic manufacturers can suffer significant economic harms while pursing further cases. Congress should streamline successive trade remedy cases and quickly respond to country hopping by passing the pending Leveling the Playing Field 2.0 Act.”
It’s clear that strong trade enforcement must be part of the U.S.’s response to China’s trade cheating.
Among the panel participants was Mamun Rashid, a former guest of The Manufacturing Report podcast. Rashid’s company Auxin Solar filed the trade case that ultimately proved Chinese solar companies were shipping products through third-party nations to avoid U.S. duties. But additional tariffs won’t be placed on those imports until at least June 2024, as the Biden administration issued a two-year pause on solar tariffs back in 2022 (which came on the heels of a rather over-the-top P.R. campaign from importers).
Rashid told Members of Congress on Wednesday that while industrial policy like the Inflation Reduction Act have been critical in helping companies like his rebound in the wake of China’s trade cheating, it won’t be enough to succeed long term because “you cannot out subsidize China.”
“Standing up to China as not been easy for a company like Auxin Solar that many called too small to matter,” he said. “But we’re small because the Chinese have been too good at stifling our growth through unfair competition. The least I can say is that we didn’t go out of business.”
Roundtable participants provided no shortage of examples of how China’s unfair trade practices have undermined American workers and businesses.
In his role as union president, Kramer represents workers from several companies that have faced China’s trade cheating. Allied Tube in Chicago once employed about 500 workers but now is down to 390, with Chinese dumping to blame, Kramer said. At another mill, workers received notice that production was being cut right before the holidays.
It’s the same story at Brad Foote Gear Works, which also once employed 500 people but now is down to just 80 or 90 workers.
Twenty years ago, Brad Foote Gear Works had a $50 million investment to make gears for wind towers. While they’re still in business today, the company isn’t growing.
“A big reason they are just holding on is while gear boxes require precision manufacturing production, it is concentrated in a few locations, with nearly half the factories in China,” Kramer said. “Unfortunately, China’s massive subsidies of technology have propelled its own producers over U.S. firms, shut the U.S. out of China’s wind market, driven down world prices, and caused lost sales in the U.S. market.”
Intellectual property theft is another common unfair trade practice deployed by China. Ranking Member Raja Krishnamoorthi (D-Ill.) held up an Oreo cookie as an example. Dupont developed the titanium dioxide used in Oreos to make its filling white — and the CCP schemed to steal the IP.
It’s not just business worries, of course. There are plenty of national and economic security concerns about China’s dominance of industry.
Mark Vandroff of Fincantieri Marinette Marine Group noted that his company is the largest ship builder in the Western world, making cruise ships, war ships and ships that service offshore energy. But doesn’t build container, large crude, or commodity ships because “subsidized Chinese industry has basically cornered the market on those.”
“If you are shipbuilder who has to compete on a fair level around the world, you end up building ships where your quality will make a difference, where your customer will want the higher quality, and it’s not a cookie-cutter ship,” he said. “That tends to be cruise ships, that tends to be war ships, that tends to be ships that service the energy industry. The cookie-cutter ships, because of Chinese subsidies, are now built in China and that is a problem for the United States because it is much harder to maintain an industrial base, both at the shipyard and all the great companies that supply ships with what they need, a robust and healthy industrial base, if you are only supplying into primarily the military market. If you don’t have large commercial shipbuilding market to supply into, you don’t get a healthy industrial base.”
The entire roundtable, which is embedded below, is worth a watch. No one is better equipped to explain how China’s unfair practices have effected the United States better than the workers and manufacturers on the front lines of this trade fight. And while it’s clear there’s still a lot of work left to do, the fact the committee held such a hearing in itself is noteworthy, as U.S. lawmakers once pursued policy that favored open trade with China at the expense of U.S. industry and factory workers.
For their part, committee members appeared ready to get to work. Krishnamoorthi used a football metaphor to describe the current state of play, arguing that the NFL wouldn’t admit a new team and allow them to play by their own rules — but that’s exactly what’s happened when we normalized trade relations with China.
It’s time to get back in the game.
“First, we have to make this right by enforcing the rules we all are supposed to abide by. Second, we make it right by investing in our own team, mainly American companies and workers, because we know American working men and women and companies can out compete anyone if they’re on a level playing field,” he said. “Finally, we have to make this right by building on the progress we’ve made in the past couple years in Congress, including by passing the CHIPS and Science Act and Bipartisan Infrastructure Law, among others.”
Committee Chairman Mike Gallagher also argued for a new policy path.
“The decline of American industry is not inevitable. It never has been,” Gallagher said. “Deindustrialization is a policy choice, and it’s been the favored choice of both parties for far too long.”