A Congressionally appointed commission examining the national security implications of U.S. China trade Thursday began two days of hearings by focusing on complaints of unfair trade practices by China.
Six lawmakers told the U.S.-China Commission that China is not complying with world trade rules and not trading fairly. China's fast growing economy has overtaken Japan as the leading supplier to the vast U.S. market. The United States has a chronic, and growing bi-lateral trade deficit with China. Byron Dorgan, a democratic senator from North Dakota, says the deficit has reached emergency levels. He wants action from the Bush administration.
"This [China] is a big, rich country with a wonderful history," he said. "But it must be smiling broadly at the relationship they've carved out with our country, where they can run giant, giant, giant trade surpluses that become a cash cow for their economy. And this country doesn't have the backbone, the will, or the nerve to stand up to it and say, 'wait a second, trade between us-bilateral or multilateral-has to be hard nosed economic policy.'"
Mr. Dorgan accuses the Bush administration of being soft on China and failing to enforce U.S. trade laws.
Other members of Congress accused China of dumping products on the U.S. market. Dumping is selling at below the cost of production.
Members of the Bush administration defended U.S. trade policy when they spoke to the commission. Henry Levine, an official in the Commerce Department, said China has made considerable progress in complying with the rules of the World Trade Organization, which it joined three years ago. But Mr. Levine, who formerly served at the U.S. consulate in Shanghai, said China's biggest shortcoming is theft of intellectual property.
"The fact of the matter is that today U.S. companies that are exporting to China, doing business in China, or in many cases companies that have had no contact with China, suffer a serious risk of infringement of their intellectual property rights by enterprises in China," he noted. "This issue is damaging to U.S./China economic relations and it is an area where we are demanding change."
Other critics focused on China's fixed rate currency peg against the dollar. Charles Schumer, a Senator from New York, is introducing legislation that would impose a punitive duty on Chinese goods unless Beijing revalues the yuan. Mr. Schumer says the list of Chinese transgressions is long.
"China manipulates its currency, violates intellectual property laws, limits access to markets, subsidizes Chinese companies, all of which leads them to fail to comply with many WTO rules," added Mr. Schumer.
The U.S. China commission was set up in 2000. It issues regular reports on the security aspects of bilateral trade. Last year's report said current trends in bilateral trade had negative implications for U.S. economic and security interests.