[Congressional Record (Bound Edition), Volume 150 (2004), Part 3]
[Extensions of Remarks]
[Pages 3374-3375]
[From the U.S. Government Publishing Office, www.gpo.gov]




      INTRODUCTION OF LEGISLATION REGARDING TRADE LAW ENFORCEMENT

                                 ______
                                 

                           HON. FRANK R. WOLF

                              of virginia

                    in the house of representatives

                        Wednesday, March 3, 2004

  Mr. WOLF. Mr. Speaker, I am introducing legislation today to change 
the process for enforcing U.S. trade laws. This bill will shift the 
authority to bring cases of unfair trade practices before the World 
Trade Organization (WTO) from the Office of the United States Trade 
Representative (USTR) to the Department of Commerce.
  I believe this change is critical in the face of the new world trade 
dynamic of the 21st century. In 2003, the U.S. registered a record 
$484.9 billion trade deficit, of more than 17 percent above the 
previous record shortfall of $418 billion in 2002. Some analysts 
predict that the trade deficit could soon top $600 billion. Since 1991, 
our trade deficit has grown nearly 620 percent--620 percent! Some say 
such a trade imbalance is not a bad thing. Others aren't so sure. I, 
for one, am deeply concerned that there has not been a sufficient 
amount of attention focused on the long-term impacts of the trade 
imbalance to our country.
  Just as important, I believe this change is necessary because of the 
entry of the People's Republic of China into the WTO in December 2001 
and the growing allegations from U.S. businesses that China, now our 
fourth largest trading partner, is not living up to its trade 
agreements. That concern multiplies when you consider that the U.S. 
trade deficit with China in 2003 was $124 billion--almost a quarter of 
the entire U.S. trade deficit last year.
  Last year I started to hear from a number of small and medium-sized 
businesses about the unfair trading practices of Chinese companies. 
There were charges that U.S. trade agencies were unfairly favoring 
Chinese corporations at the expense of American companies in trade 
dumping cases. The Commerce-Justice-State appropriations subcommittee, 
which I chair and which oversees the funding for most U.S. trade-
related agencies, held a hearing to look into this matter. My 
subcommittee heard from representatives of hard-hit furniture, 
pharmaceutical and agriculture industries. Their testimony was 
alarming.
  America's manufacturers contend that China is deliberately 
undervaluing its currency--the yuan--by as much as 40 percent, giving 
China a trade advantage when competing with U.S. companies and 
contributing to the loss of U.S. factory jobs. During a visit to China 
last September, U.S. Treasury Secretary John Snow called on China to 
adopt a more flexible exchange rate system. The Chinese government has 
not made any such changes.
  When it comes to trade with China, the list is long with promises 
made and promises broken. China has broken its promise:
  To remove agricultural and industrial quotas and tariff rate quotas;
  To stop requiring American companies to pay exorbitant rates to 
partner with Chinese companies so our companies can have access to the 
Chinese markets; and
  To stop using its tax policies on U.S. imports into China, therefore 
discriminating against the import of our goods. For example, our 
semiconductor companies and our fertilizer producers state that China's 
practice of rebating more than 80 percent of its value-added tax (VAT) 
to domestic firms puts foreign suppliers, our companies, at a huge 
disadvantage in the Chinese market.
  China also has a complete disregard for U.S. intellectual property 
rights. The Chinese market also continues to be dominated by piracy of 
copyrighted material. Some U.S. sources charge that American businesses 
have lost billions in revenue due to China's copyright piracy and other 
intellectual property rights violations. We have heard that they have 
even copied an entire car!
  Estimates are that 93 percent of the business software applications 
in China are pirated and 88 percent of the motion pictures and the 
music seen or heard in the country are stolen. Pirated copies of new 
software being released in America often ends up for sale on the 
streets of Beijing before we can buy the real thing in northern 
Virginia.
  But the United States has not brought an intellectual property rights 
case against China since Beijing's entry into the WTO. Not one case.
  How can U.S. manufacturers, especially the small and medium-sized 
businesses, compete with Chinese-based factories operating with the 
most advanced technologies, the most modern equipment, and virtually 
free Chinese labor?
  We have had many debates on the importance of intellectual property 
rights on this floor and later on in the week, we may have another. 
Innovation is the cornerstone of the American economic engine. We 
cannot continue to trust the Chinese when they promise to enforce their 
intellectual property laws.
  I ask one question: when has the People's Republic of China closed 
down a market with the most egregious cases of counterfeit goods?
  Not one of the markets selling counterfeit pharmaceuticals, health 
and safety goods, and automobile parts has been shut down. Not a single 
one. Yet, the USTR believes the People's Republic of China is keeping 
its promise to enforce intellectual property rights.
  I know the Office of the USTR has hard-working people whose goal is 
to give U.S. businesses the opportunity to flourish in the global 
economy. But I believe it is being stretched too thin under its current 
operation of having the same people who negotiate trade agreements be 
the same people who determine whether or not countries are living up to 
their obligations.
  Enforcement is being shortchanged and U.S. companies are not being 
well served. I believe our nation's business community and our trade 
policy would be better served by having the Department of Commerce as 
the trade law enforcer.
  The Department of Commerce has the budget and the resources to 
address the issues of small and medium-sized companies. The Commerce 
Department works daily with American companies to promote 
competitiveness and increase productivity. The Commerce Department is 
on the ground floor with these companies. They understand how Chinese 
imports and trade barriers are hurting American companies.
  By comparison, the Office of the USTR has 202 federal employees to do 
all this work. The USTR is in the Executive Office of the President and 
regardless of the administration, this office's budget requests are 
tightly controlled. Within the past two years alone, the budget request 
was woefully inadequate to just maintain ongoing operations of the 
office.
  The FY 2004 request also was insufficient to continue the operations 
of the USTR and at the urging of the trade community, the 
Appropriations committees provided additional funding for the USTR. 
This effort was supported by the Senate Finance and House Ways and 
Means committees.
  Astonishingly, the FY 2005 USTR budget request released in early 
February includes less money than was provided this year. Less money. 
Yet the office says it will begin seven more free trade agreements. And 
they hope to

[[Page 3375]]

accomplish this extra work with less money than the year before? It is 
preposterous that such a level of work would require less money. And 
what happens to the mounting allegations of unfair trade practices 
under trade agreements already signed while the USTR negotiates new 
deals--with fewer resources than the year before when no unfair trade 
cases were brought before the WTO?
  I have not yet touched on what I believe is the overriding issue 
involving trade with China--China's egregious human rights record. For 
the record, I did not support granting China permanent normal trade 
relations (PNTR), a term recently changed from what I believe was a 
more appropriate ``most-favored-nation trade status'' designation. I 
know there were good and reasonable people on both sides of this issue, 
but for me, trade agreements must come with a price and that price is 
respect for the universal declaration of human rights.
  As we have seen with its trade obligations, China also has a long 
list of broken promises when it comes to improving the rights of its 
people. Last year, I requested that the U.S. support a resolution 
condemning the human rights abuses in China in the context of the U.N. 
Commission on Human Rights. The State Department explained to me that 
the department was encouraged by promises made by the Chinese. 
Therefore, the U.S. refused to put forth condemning resolutions.
  Last week, the State Department released the 2003 Human Rights Report 
on China. This report showed that not only did China fail to live up to 
its promises, but its human rights record actually grew worse. The 
people of China do not enjoy the freedoms that we have as American 
citizens. Imagine a country where factory workers have no workplace 
safety, labor or environmental protections and are required to work 80 
hour-weeks for no more than $110 per month to produce goods for export.
  Many CEO's of U.S. companies supported PNTR with China hoping for new 
markets for their products and services. We are now seeing some of 
these same business leaders questioning whether or not it was the right 
decision for their businesses and their communities in the long term. 
Many of these companies today who trade with China do so with the hope 
that the Chinese don't copy their products before they can make a 
profit.
  That's not the way free and fair trade should work. If the U.S. has 
made trade agreements with China and with other countries, we need to 
make sure those agreements are enforced. The Office of the USTR has had 
many opportunities to bring unfair trading cases against China. 
Meanwhile, U.S. factories continue to close, American workers continue 
to lose jobs to foreign companies, and the U.S. trade deficit continues 
to soar.
  Free trade must be our strategy and not just a goal. If trading 
partners don't play by the rules, then U.S. firms are at a disadvantage 
and American workers and families are hurt. The U.S. must enforce trade 
laws, and we need to give the Commerce Department the opportunity to 
take on that responsibility.

                                H.R. --

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. TRANSFER OF FUNCTIONS.

       (a) Identification of Certain Countries.--Section 182 of 
     the Trade Act of 1974 (19 U.S.C. 2242) is amended--
       (1) in subsection (a)--
       (A) by striking ``United States Trade Representative'' and 
     inserting ``Secretary of Commerce''; and
       (B) by striking ``Trade Representative'' each subsequent 
     place it appears and inserting ``Secretary''; and
       (2) in subsections (b) through (g), by striking ``Trade 
     Representative'' each place it appears and inserting 
     ``Secretary''.
       (b) Enforcement of United States Rights Under Trade 
     Agreements and Response to Certain Foreign Trade Practices.--
     Chapter 1 of title III of the Trade Act of 1974 (19 U.S.C. 
     2411 et seq.) is amended as follows:
       (1) Section 301(a)(1) is amended by striking ``United 
     States Trade Representative'' and inserting ``Secretary of 
     Commerce''.
       (2) Section 303(b)(1)(A) is amended by striking ``United 
     States Trade Representative'' and inserting ``Secretary of 
     Commerce.''
       (3) Section 301(d)(8) is amended to read as follows:
       ``(8) The term `Secretary' means the Secretary of 
     Commerce.''.
       (4) Sections 301 through 310 are amended by striking 
     ``Trade Representative'' each place it appears and inserting 
     ``Secretary''.

     SEC. 2. APPLICABILITY.

       (a) In General.--Subject to subsection (b), the amendments 
     made by section 1 shall take effect 90 days after the date of 
     the enactment of this Act.
       (b) Pending Petitions, Investigations, and 
     Determinations.--The amendments made by section 1 shall not 
     affect any petition filed before, or investigation pending 
     on, the effective date set forth in subsection (a), under 
     chapter 1 of title III of the Trade Act of 1974. Such 
     petitions and investigations shall proceed as if section 1 
     had not been enacted. The amendments made by section 1 shall 
     not affect any determination made or action taken under 
     chapter 1 of title III of the Trade Act of 1974 before the 
     effective date set forth in subsection (a).

     SEC. 3. URUGUAY ROUND AGREEMENTS ACT.

       (a) Transfer of Certain Functions.--Those functions of the 
     United States Trade Representative under the following 
     provisions of the Uruguay Round Agreements Act are 
     transferred to the Secretary of Commerce, effective 90 days 
     after the date of the enactment of this Act:
       (1) Section 123.
       (2) Paragraphs (5), (6), and (7) of section 124.
       (3) Section 127.
       (4) Subsections (e) and (f) of section 281.
       (b) Conforming Amendments.--
       (1) Amendments.--Section 129 of the Uruguay Round 
     Agreements Act (19 U.S.C. 3538) is amended--
       (A) by striking ``Trade Representative'' each place it 
     appears and inserting ``Secretary of Commerce'';
       (B) in subsection (a)(6), by striking ``direct the 
     administering authority to'';
       (C) in subsection (b)--
       (i) in paragraph (1), by striking ``the administering 
     authority and'';
       (ii) in paragraph (2), by striking ``shall,'' and all that 
     follows through ``issue a determination'' and inserting ``may 
     issue a determination'';
       (iii) in paragraph (3), by striking ``the administering 
     authority and''; and
       (iv) in paragraph (4)--
       (I) by striking ``the administering authority and''; and
       (II) by striking ``direct the administering authority to''; 
     and
       (D) in subsection (c)(1)--
       (i) in subparagraph (A), by striking ``the date on which'' 
     and all that follows through ``determination,'' and inserting 
     ``the date on which the Secretary of Commerce revokes an 
     order pursuant to that determination,''; and
       (ii) in subparagraph (B), by striking ``the date on which'' 
     and all that follows through the end of the sentence and 
     inserting ``the date on which the Secretary of Commerce 
     implements that determination''.
       (2) Effective Date.--The amendments made by paragraph (1) 
     shall take effect 90 days after the date of the enactment of 
     this Act.

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