Bush Administration Defends China Trade Policy

The Bush administration on Thursday defended the way it is dealing with the soaring trade deficit with China, but influential lawmakers released their own proposal to put more muscle into the fight.

U.S. Trade Representative Rob Portman told the Senate Finance Committee that America's relationship with China had entered a new phase that would mark Beijing's growing responsibilities as a major trading power.

On Tuesday, Portman said he was creating a special trade enforcement task force and pledged "rigorous enforcement" of laws aimed at curbing unfair trade practices.

The government reported last week that the U.S. trade deficit with China hit $202 billion last year, the largest ever with a single country and a 25 percent increase from the 2004 deficit.

Senators questioned whether the administration was going far enough in approach with China.

The committee chairman, GOP Sen. Charles Grassley of Iowa, said there was rampant copyright piracy of U.S. products and that he had grown "increasingly frustrated" over China's currency policies.

American manufacturers contend China is depressing the value of its currency by as much as 40 percent, making Chinese goods cheaper in U.S. markets and American goods costlier in China.

Sen. Max Baucus said he was concerned that when Portman's office pushed for trade cases, it often was overruled by the State Department, which argued that a get-tough approach on economic issues would harm U.S. foreign policy interests.

"The administration does not spend sufficient time focusing on our economic agenda, at great peril," Baucus, D-Mont., told Portman.

Portman said there had been some successes in trade dealings with China but "we need to see a lot more."

Baucus said he had joined with Sens. Orrin Hatch, R-Utah, and Debbie Stabenow, D-Mich., in introducing legislation that would:

—create a chief trade enforcement officer to pursue unfair trading practices.

—require the trade representative to provide Congress with a list of the most significant unfair trade barriers facing U.S. companies each year and explain what is being done to dismantle those barriers.

—give the Senate Finance Committee and the House Ways and Means Committee, which have jurisdiction over trade, the power to add to that list.

Congress already requires an annual report on high-level trade barriers, but the administration does not have to pursue enforcement actions as remedies.

Baucus and Hatch told reporters that their proposal would bring more pressure on the administration to pursue trade cases.

Trade is expected to be a major issue in the November congressional elections. Democrats contend Republicans have not done enough to protect U.S. workers from unfair competition from low-wage countries and to offset the loss of 3 million U.S. manufacturing jobs since mid-2000.

In addition to the $202 billion record trade deficit with China last year, the United States for a fourth straight year set a record for the overall deficit — $726 billion.

A separate Senate bill, sponsored by Sens. Charles Schumer, D-N.Y., and Lindsey Graham, R-S.C., would impose 27.5 percent penalty tariffs on all Chinese imports unless Beijing goes further in allowing its currency to rise in value against the dollar.