Senators Susan Collins (R-ME) and Evan Bayh (D-IN) have reintroduced the Stopping Overseas Subsidies (SOS) Act, which will allow the
United States to fully enforce its antisubsidy laws and help companies fight unfair trade from overseas. Illegal subsidies, which often take the form of
free rent and utilities and loans that are never meant to be repaid, allow foreign companies to price their products at artificially low levels, giving
them an unfair advantage over American companies that receive no such advantages. The SOS Act would revise current trade laws to ensure that all
countries doing business with the U.S. are operating under the same rules that help to ensure fair competition for American manufacturers. Senators Collins
and Bayh originally introduced this legislation in March 2005, during the last session of Congress.
“Our nation’s manufacturers and their employees 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. Time and time again, I hear from manufacturers in my state 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,” said Senator Collins. “U.S. industries don’t want protection – they want fair competition. Illegal subsidies distort fair competition, regardless of the economic system in which they are used. Our legislation simply levels the playing field by allowing anti-subsidy petitions to be brought against non-market economies in addition to market economies. Some countries, such as China, want to have all the benefits of engaging in international trading institutions and systems yet continue to cheat on the system with no penalties. It is time these countries were held to the same standards as other countries around the world.”
For example, the American residential wood furniture industry has experienced devastating losses due to surges of unfairly priced furniture imports from China. According to the U.S. Bureau of Labor Statistics, 146,600 jobs, or about 22 percent of the workforce, have been lost in the U.S. furniture industry since 2000. Unfairly priced imports from China are a leading cause in these job losses. China’s wooden bedroom furniture exports to the U.S., which amounted to just $169 million in 1999, reached an estimated $1.8 billion in 2006. By subsidizing investments in furniture manufacturing facilities, China is exploiting the U.S. market to the benefit of its producers and putting our employees at an unfair advantage.
“One furniture manufacturer in Maine, Moosehead Manufacturing, struggled for years to cope with the onslaught of unfair imports from China. Despite
the company’s quality products and attempts to survive through several rounds of layoffs and participation in the federal Trade Adjustment for Firms program, Moosehead was not able to keep its doors open in the face of unfair Chinese imports. The company announced its closing on February 8, 2007,” said
Senator Collins. “This is a tragic development – for this family-owned business, for its skilled employees, and for the community and state. It is because of the experience of manufacturers such as Moosehead that I am reintroducing the Stopping Overseas Subsidies Act.”
Until recently, the practice of the Department of Commerce was to accept an anti-subsidy petition against any market economy-such as Canada or Chile -
but not against a non-market economy such as China. As a result, non-market countries that subsidize their industries the most heavily and cause the most
injury to U.S. industries and workers, such as China, were exempt from the reach of American anti-subsidy laws. The countervailing duty statute on its
face in no way limits the application of the CVD law to any country. Unfortunately, the Department’s interpretation of this statute for the last
two decades has been that it does not apply to non-market economies, and this policy was upheld by a 1986 federal court decision that maintained that
Congress needs to clarify the statute on this issue, which is what the SOS Act does.
According to the United States Department of Labor, 10,400 manufacturing jobs in Maine have been lost since 2001, a 14.8 percent decline. The
legislation introduced by Senators Collins and Bayh has received the support of numerous national manufacturing organizations and manufacturing businesses in Maine, including the Maine Forest Products Council, Maine Wood Products Association, and the NewPage Corporation.
“NewPage Corporation thanks Senator Collins for all her work on this important legislation,” said Jerry LeClaire, NewPage-Rumford vice president
and mill manager. “Application of the subsidy law to China will help ensure fair trade in the paper industry, and will help preserve high quality
papermaking jobs in Maine, and elsewhere.” NewPage’s Rumford mill has 1,050 employees and operates four paper machines, producing 1,800 tons of coated printing papers each day.
###