US Government Rejects Petition On China Trade

The Bush administration has denied a petition by the American Federation of Labor – Congress of
Industrial Organizations (AFL-CIO) to invoke trade sanctions against China, and in the process
poured cold water on a similar petition that a number of manufacturing industries, including
textiles, were planning to file. Last month, the AFL-CIO filed a petition under Section 301 of the
Trade Act of 1974, which permits the US government to invoke trade sanctions against countries that
it believes are engaged in unfair international trade practices. The labor union charged that China
is guilty of unfair trade practices because of its labor rights abuses. A coalition of
manufacturing industries, known as the Fair Currency Alliance, was preparing a Section 301 petition
based on China’s alleged manipulation of its currency, which industry officials claim amounts to as
much as a 40 percent subsidy for Chinese exports to the United States.

Appearing at a news conference, four Bush administration cabinet officials said they cannot
support invoking punitive tariffs on Chinese imports and suggested other approaches to solving the
problems. US Trade Representative Robert B. Zoellick said accepting the petitions would take us
down the path to economic isolationism. Instead, he said the United States is engaged with China on
a number of trade reform issues and that progress in a number of areas had been made during recent
meetings between US and Chinese trade officials. Commerce Secretary Donald L. Evans said China will
be required to reform its labor standards and currency policies before it can be granted market
economy status under US trade laws.

Cass Johnson, president of the National Council of Textile Organizations, which is a member
of the Fair Currency Alliance, expressed bitter disappointment at the administrations rejection of
the petitions and the tone of the rhetoric the trade officials used in rejecting them. He said the
way the issue was handled and the comments of administration officials indicates they are committed
to doing anything about the problems manufacturing industries are having with China.

May 2004