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Ways and Means to Move ‘Fairly Quickly’ on Countervailing Duties Bill

In another sign that key members of the new Democratic majority are taking an activist stance on trade issues, a House Ways and Means subcommittee is moving quickly on a measure that would clarify that the United States can strike back against countries that subsidize businesses, regardless of whether the country has a market economy.

The measure, introduced by Rep. Artur Davis (D-Ala.) with the support of Rep. Phil English (R-Pa.), would allow the U.S. to apply countervailing duties against goods imported from nonmarket economies, which are fees added by the U.S. government to offset the lower cost of imports from countries that offer subsidies to their exporting industries. Such fees have not traditionally been imposed on goods from nonmarket economies because of the difficulty of determining the value of the subsidy.

Rep. Sander Levin (D-Mich.), chairman of House Ways and Means subcommittee on trade, plans to schedule hearings for late next week on the subsidy bill, H.R. 1229. An aide to the full committee said that Ways and Means “would like to move this bill fairly quickly.” Both Davis and English serve on the Ways and Means Committee.

In the Senate, Jay Rockefeller (D-W.Va.) has introduced a broader trade bill that would take a similar approach on countervailing duties.

The push by some Democrats to rein in free trade gathered steam in the 2006 midterm elections, though the Senate promises to be a tougher forum than the House for critics of free trade.

A Democratic aide cited long-standing complaints about U.S. reluctance to impose countervailing duties. “We in the majority intend to act on that,” Levin said in a speech at the Center for American Progress on Monday.

In one case currently pending before the World Trade Organization, China has argued that U.S. law does not provide for the use of countervailing duties against nonmarket economies.

Trade with China’s economy accounts for approximately one-third of the current U.S. trade deficit.

Levin accused both China and Japan of using a weak currency to give their exports an advantage when it comes to their trade balance with the United States. Under a measure sponsored by Reps. Tim Ryan (D-Ohio) and Duncan Hunter (R-Calif.), a weak currency could be considered a subsidy for the purposes of imposing countervailing duties.

The Davis-English bill would call for a study of Chinese subsidies by the U.S. International Trade Commission, which would have nine months to report on its findings.

In Monday’s speech, Levin also criticized Treasury Secretary Henry Paulson for defending Japan’s weak currency against a European challenge and indicated his interest in the legislation to address currency fairness.

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