Washington Needs a ‘Progressive Prescription for US-China Trade,’ Experts Say
U.S.-China trade tensions have been simmering for some time, and with just four months to go before the presidential election, American businesses with skin in the game are awaiting some kind of resolution.
No issue will be more consequential than trade in regards to the country’s standing in the world, according to the Center for American Progress (CAP), which on Monday held a panel discussion entitled “A Progressive Prescription for U.S.-China Trade” featuring National Council of Textile Organizations (NCTO) CEO and president Kim Glas and CAP senior fellow Ryan Mulholland.
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The talk, presented by the Washington, D.C. think tank, centered on the policies that stand to impact U.S. companies and investors as well as American workers.
NCTO’s Glas summed up the U.S. relationship with China as “complicated.”
Those complexities have “crystallized” over the course of the past year with the China’s economic headwinds coming into sharper focus and higher levels of unemployment leading to a ramping up of predatory trade practices that are impacting industries across the globe—including the U.S. textile sector. Those practices include the utilization of subsidies to bolster domestic industry, the laying down of trade barriers, intellectual property theft and an alleged reliance on forced labor.
“The reality is, the tools that we have in the toolbox are outdated for the time that we’re living in,” Glas said, noting that the U.S. needs to ramp up its enforcement efforts.
Duties like the Section 301 punitive tariffs levied first under former President Donald Trump’s administration—and maintained, over the course of the past three-and-a-half years by the Biden administration—“continue to be an important tool when used appropriately,” Glas said, noting that they are in fact “one of the few tools that… any administration has.”
Glas explained that currently, American businesses that are being negatively impacted by the heavy flow of China’s subsidized imports have a tough time seeking governmental relief.
According to CAP’s research report, antidumping and countervailing duties (AD/CVD) are the most common trade enforcement action and among the oldest, having been introduced in the 1930 Tariff Act and updated in the Trade Agreements Act of 1979.
“They were designed to level the playing field for U.S. manufacturers by providing relief to industries that were ‘materially injured,’ or threatened with injury, due to the sale of imported products at less than fair value, usually because the foreign producer benefits from subsidies from its home government,” the group’s reporting said.
Notably, the Biden administration has implemented more AD/CVD than any administration in history.
But filing trade cases is in many instances “extremely complicated and cost prohibitive,” according to Glas, with a high burden of proof for companies aiming to show that they have lost business, workforce capacity and market share. “We need to ensure that these tools are more modernized—that when we are seeing predatory trade behaviors that are impacting workers and communities, that people can more easily access this,” she said.
“No industry is immune to the global competition or race to the bottom, and we need to hold predators, all countries, including China, accountable when subsidies are being used to undermine our workforce and our people,” she added. “And we need to ensure that the workforce of the future is still the manufacturing sector; you cannot have an industrialized economy—a modern economy—without a strong manufacturing sector here at home.”
Glas also stressed the need for reform “the most archaic trade rule”—the de minimis trade exception, put in place in the 1930s. She explained that the provision was originally conceptualized to prevent travelers from having to pay duties on small items like souvenirs when they returned home to the U.S. Today, though, a massive number of foreign goods are entering the country via direct-to-consumer e-commerce, a la Shein and Temu, and de minimis has become a cornerstone of their business models.
Small packages worth often much less than the $800 threshold are deluging U.S. gateways daily. “They’re not getting any scrutiny, and that’s facilitating dangerous products, whether they’re made with toxic materials, whether it’s fentanyl and illicit drugs… slave labor products,” Glas said.
“We never negotiated a free trade agreement with every country in the world for nothing—meaning no labor, no environmental standards, no investments in workers and communities,” she explained, noting that China is receiving the benefits of being a FTA partner despite demonstrating a lack of alignment with U.S. values. “It undermines everything that we’re trying to do in terms of… modernizing our free trade agreements to have a worker centric approach,” she said.
“There should be nothing [partisan] about getting rid of de minimis, because it is hurting our industry,” she added.
There have been some moves to reform de minimis. The House recently passed legislation that would bar any product covered by a trade penalty, like a Section 301 tariff, from qualifying for de minimis exception. Speaker of the House Mike Johnson (R-La.) has said he’s putting together a China package that includes de minimis reform, while Senators Sherrod Brown (D-Oh.) and Rick Scott (R-Fla.) introduced a bill in the Senate that would abolish de minimis. Congressman Earl Blumenauer (D-Ore.) has done the same on the House side.
“This is a very active discussion; everyone’s talking about de minimis as a problem, but I don’t think everybody’s coalesced around what the solution is, and we need urgent solutions,” Glas said.
CAP’s Mulholland agreed that the current “trade remedy toolkit” is too dated to adequately address “the needs of the modern economy.”
“We are fighting a modern, great-power economic rivalry with China using Vietnam-era technology,” he said. “It’s not just finished goods that are moving back and forth between borders, but materials, component parts that move back and forth across multiple borders, many, many times before a product is destined for a consumer market,” he explained, “and so our trade tools are just not aligned to kind of what’s needed in the modern world.”
Mulholland also echoed Glas’ points about the difficulties businesses face in demonstrating injury due to the actions of foreign economies. “There’s a lot of situations where if you wait for injury, you’ve lost that industry,” he said. “And that’s simply too long to wait.”