Because it faces unfair market conditions, Maine's own Moosehead Manufacturing, a furniture manufacturer with a proud heritage, was forced to eliminate one-quarter of its employees. In fact, the entire residential wood furniture industry in America has experienced devastating losses due to the surge in unfairly priced furniture imports from China. According to the U.S. Bureau of Labor, the U.S. furniture manufacturing industry lost 34,700 jobs—28 percent of its workforce.
China's wooden bedroom furniture exports to the U.S., which amounted to just $169 million in 1999, reached an estimated $1.2 billion in 2003. By subsidizing investments in furniture manufacturing facilities, China exploits the U.S. market to the benefit of its producers and puts American manufacturers like Moosehead at an unfair disadvantage.
This unfair practice is one reason I introduced the "Stopping Overseas Subsidies Act" (SOS). The bill revises current trade remedy laws to ensure that U.S. countervailing duty laws apply to imports from non-market economies. Our nation's trade remedy laws are intended to give American industries and their employees relief from the effects of illegal trade practices. Under current regulations, U.S. industries who are competing against these unfairly advantaged foreign producers can file anti-subsidy petitions against any market economy, such as Canada or Chile. However, a petition cannot be filed against a non-market economy, such as China. As a result, those countries, such as China, that subsidize their industries the most heavily and cause the most injury to U.S. industries and workers are exempt from the reach of American anti-subsidy laws. My bill would change those outdated trade remedy laws, and allow our manufacturers to seek redress from unfair trade practices.
Over the past two decades, there have been significant economic changes in many of the countries classified as non-market economies. This is particularly true in China, one of our largest trading partners. China has undertaken major economic reforms. Today, China's economy is not completely state-controlled; government price controls on a wide range of products have been eliminated. Many enterprises and even entire industries operate and compete in an economic system that has elements of a free market. And China has taken steps toward fully integrating into the global trading system by joining to the World Trade Organization (WTO) and by working toward the establishment of a modern commercial, financial, legal, and regulatory infrastructure.
The problem is not China's economic liberalization and modernization. The problem is this: although China now has the capacity to be a key international economic player, the country has repeatedly refused to comply with standard international trading rules and practices. These violations include the use of subsidies, currency manipulation, and other economic incentives that are designed to give its producers an unfair competitive advantage. The Chinese government even reimburses many enterprises for their operating losses and provides loans to uncreditworthy companies. Without my bill, U.S. industries have no direct recourse to combat these unfair practices. They instead must rely upon government-to-government negotiations or on the dispute settlement processes of international organizations such as the WTO. While these channels might eventually lead to relief, it usually takes years to see results – and by that time, the economic devastation to the industry, its employees, and the communities could be irreparable.
Unfair market conditions cannot continue. No state understands this more than our state of Maine. According to a recent study by the National Association of Manufacturers, on a percentage basis, Maine lost more manufacturing jobs in the previous three years than any other state—22 percent. This is why organizations such as the Maine Forest Products Council and the Maine Wood Products Association have strongly endorsed my bill.
Those Maine organizations are not alone; over twenty organizations and a number of private companies, representing a range of industries, agree that we must fix our outdated trade laws. Some of these organizations include the American Forest & Paper Association, the National Council of Textile Organizations, the Printing Industries of America, and the Steel Manufacturers Association. Further, the National Association of Manufacturers has endorsed the bill and listed it as one of its top trade agenda items for 2005.
In addition, the United States Economic and Security Review Commission, a bipartisan organization established in 2000 to provide recommendations to Congress on the relationship between the United States and China, has endorsed the goals of this bill.
Moosehead Manufacturing Company in Monson, which has been directly affected by this unfair practice, makes the case best:
"U.S manufacturers, especially those in Maine can compete with anyone in the world, given an equal opportunity. We have a skilled work force, a plentiful wood supply, and a dash of good old Yankee ingenuity which has made Maine a leader in secondary wood products. All we want is to be able to compete fairly. I feel that it is time that Congress update the CVD laws to ensure that the same laws which apply to our trading partners apply to non-market economies such as China."
U.S. industries, including Moosehead Manufacturing, don''t want protection; they want—and deserve—fair competition. Illegal subsidies distort fair competition, regardless of the economic system in which they are used. Countries such as China want all the benefits of engaging in international trading institutions and systems. It is time those countries were held to the same standards as other countries around the world. The Stopping Overseas Subsidies bill will help ensure that all countries follow the same rules of trade.
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