NAM Says China Not Complying With Trade Rules; Establishes China Task Force For China Currency Issues

China's currency undervaluation and counterfeiting causing problems for U.S. manufacturers; new task force looking into more effective trade remedies for small manufacturers.

Testifying before the interagency Trade Policy Staff Committee on Thursday, Bill Primosch National Association of Manufacturers (NAM) Director for International Business said that China, as a mature member of the World Trade Organization (WTO), should be expected to comply fully with its international trade commitments, but it is failing to do so.

Currency undervaluation, counterfeiting, subsidies, value-added tax (VAT) concerns, and deficiencies in the regulatory process are the problems that U.S. manufacturers must face as they struggle to compete with China and sell more U.S. products there, commented Primosch.

“U.S. exports to China are growing at a rapid rate, up 36 percent in January-July 2006 over the same period in 2005, and China may surpass Japan this year as the third largest market for U.S. products. But despite the export growth, bilateral trade is still highly unbalanced, with the trade deficit in 2006 likely to well exceed the $201 billion record set last year,” Primosch said.

According to Primosch, the U.S. must “vigorously” enforce its rights in the WTO.

“Failure to do so will have serious consequences for U.S. manufacturers, both companies that export to China and those that compete against Chinese-made products in the U.S. and global markets,” Primosch said.

Also on Thursday, The NAM Board of Directors, at their annual fall meeting in Washington, D.C,  established the NAM U.S. – China Business Task Force to concentrate on the problem of China’s slow movement toward currency flexibility and to work with Treasury Secretary Paulson on the issue.

One of the prime directives of the task force will be to find ways to make trade remedies more available to smaller firms who cannot afford the expensive legal cases many are facing, said NAM President John Engler.

“Manufacturers are the backbone of America and we will show that strength through this task force,” Engler said.  “Together we will work through the Administration and Congress to alleviate unfair burdens from abroad, such as China’s undervalued currency, and at home, from rising structural costs.”

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