UPDATE 3-US bill targeting Chinese subsidies goes to Obama

Tue Mar 6, 2012 6:21pm EST

* Bill overturns appeals court ruling in December

* Court ruled against US duties on about two dozen goods

* Obama expected to sign bill

By Doug Palmer

WASHINGTON, March 6 (Reuters) - The House of Representatives on Tuesday voted 370-39 to ensure the United States can impose duties on subsidized goods from China and Vietnam, a move the White House said was needed to protect American jobs.

The bill, which overturns a recent court ruling, now goes to President Barack Obama to sign it into law. The Senate passed the legislation on Monday, in a rare display of bipartisan cooperation, just days after it was introduced.

"China distorts the free market by giving enormous subsidies to its producers and exporters, and our companies and workers should not be expected to compete against the deep pockets of the Chinese government," House Ways and Means Committee Chairman Dave Camp, a Michigan Republican, said during debate.

Vice President Joe Biden praised Congress for taking "a clear stand against the unfair trade practices that have put countless American jobs in jeopardy."

The Obama administration helped craft the bipartisan bill after an appeals court ruled in December the U.S. Commerce Department did not have authority to impose countervailing - or anti-subsidy - duties on goods from "non-market economies".

The decision endangered countervailing duties on about two dozen goods from China and Vietnam worth more than $4 billion in trade, as well as potential new duties in cases involving solar panels and wind turbine towers from China.

U.S. Commerce Secretary John Bryson said current duties protect tens of thousands of jobs at more than 80 companies in 38 states. They cover steel, aluminum, paper, chemicals and other goods from China and plastic shopping bags from Vietnam.

"With this bill, we are making clear that the Federal Circuit's decision was wrong and it cannot stand," said Representative Sander Levin, the top Democrat on the House Ways and Means Committee.

The vote gave both Republicans and Democrats a chance to show they are being tough on China, which many Americans see as an unfair trader. Last year, U.S. imports from China totaled a record $399.3 billion.

CHINA BASHING A BIPARTISAN SPORT

Some trade lawyers predicted it would lead to industry groups filing more trade cases against China.

"It's interesting to note that Congress can't agree on most anything, but can agree to bash China," said William Perry, an international trade partner at Dorsey & Whitney in Seattle.

The bill steers clear of the more politically divisive issue of China's currency, which many lawmakers believe Beijing deliberately undervalues to give its companies an unfair price advantage in international trade.

The Democratic-controlled Senate passed legislation last year to pressure Beijing on the issue, but the Republican-dominated House has refused to take up the measure on the grounds it could start a trade war.

The conservative group Club for Growth, which is influential with the Tea Party movement, lobbied against the bill, which it said would increase the price of imported goods.

On Tuesday, it blasted the measure as a "tax increase" after the Congressional Budget Office estimated it would raise $160 million in new revenue over 10 years.

For years, the Commerce Department did not impose countervailing duties on non-market economies like China and Vietnam on the grounds it was impossible to measure subsidies in countries where the state played such a dominant role.

That changed in the mid-2000s, when industry groups persuaded the administration of then-President George W. Bush that China had advanced enough that it was possible to calculate subsidies. However, the groups did not want Commerce to take the additional step of designating China as a market economy because that could potentially adversely affect how another type of trade remedy, antidumping duties, are calculated.

China contested the policy change both at the World Trade Organization and through the U.S. court system.

At the WTO, it won a decision that the United States was "double counting" many Chinese subsidies when it applied both countervailing and antidumping duties on the same good.

Then in December, the U.S. Court of Appeals for the Federal Circuit ruled the Bush administration should have obtained legislation from Congress to make the policy change because the previous practice of not applying countervailing duties to non-market economies had become embedded in U.S. law.

The bill addresses the double counting issue to make sure U.S. countervailing duties against non-market economies do not violate WTO rules, lawmakers said.

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