"Unfair market conditions cannot continue to cause our manufacturers to hemorrhage jobs. Industries across Maine that produce products ranging from paper to footwear to furniture are being harmed by unfair trade practices, and it is time we put a stop to it," said Senator Collins. "I hear from manufacturers in Maine whose efforts to compete successfully in the global economy simply cannot overcome the practices of illegal pricing and subsidies of nations such as China. The results of these unfair practices are lost jobs, shuttered factories, and decimated communities."
Senator Collins' legislation would allow the U.S. to enforce anti-subsidy laws, known as countervailing duty laws, on all trade partners. Countervailing duty laws prohibit foreign countries from subsidizing industries and businesses in a way that allows those industries and businesses to sell their goods below the cost that American manufacturers are able to offer. Current trade law does not allow the U.S. to enforce these laws on countries that traditionally operate under a state controlled economy. But Senator Collins' legislation updates the law to take into account the fact that many of these countries, like China, now allow their manufacturing industries to operate as relatively free markets engaged in international trade.
In China, the overwhelming subsidy for Chinese manufacturers comes in the form of currency manipulation. The government pegs the Chinese currency to the U.S. dollar at artificially low levels, allowing Chinese manufacturers to undervalue the prices of their exports. This practice has already been ruled a violation of International Monetary Fund and World Trade Organization rules, yet it continues and the U.S. currently has no domestic laws to protect against it. The Chinese government also reimburses many enterprises for their operating losses.
"The problem is not the economic liberalization and modernization of countries like China. The problem is that these countries which are becoming major international trade players are refusing to comply with standard international trade rules and practices," said Senator Collins. "We must level the playing field. Our nation's manufacturers can compete against the best in the world, but they cannot compete against nations that provide huge subsidies and other unfair advantages to their producers."