- The Washington Times - Friday, March 30, 2007

The Bush administration said yesterday it will slap sanctions on Chinese high-gloss paper imports, the first time duties have been imposed on a communist country for subsidizing an industry.

The decision, a reversal of 23-year-old trade policy, reflects China’s growing economy, the Department of Commerce said.

Commerce can apply such duties on imports if it determines the foreign producer has received unfair subsidies from its government.

In 1984 the Commerce Department decided not to apply the “countervailing duty” law to “nonmarket economy,” or communist, countries because subsidies had no measurable effect on the Soviet-style economies.

However, Commerce Secretary Carlos Gutierrez said yesterday that present-day China “is not a Soviet-bloc economy of the mid-1980s.”

“Companies in China do respond to subsidies and we can reasonably measure the response,” he told reporters.

Yesterday’s decision results from an October request by paper manufacturer NewPage Corp. of Dayton, Ohio, that Commerce reconsider its policy of not applying the law to China. NewPage said several Chinese companies received subsidies such as tax breaks, debt forgiveness and low-cost loans.

In its preliminary decision, Commerce ruled that Chinese producers and exporters received subsidies that could be subject to the anti-subsidy law.

Senate Finance Committee Chairman Max Baucus, Montana Democrat, said he was glad Commerce is acting, but said he wants legislation stating that Commerce can impose the duties on communist countries.

“We have to strengthen and enforce our trade laws for the sake of U.S. workers,” he said.

Mr. Gutierrez said the Chinese economy “has developed to the point that we can add another trade remedy tool, such as the countervailing duty law.”

China expressed strong dissatisfaction with the U.S. decision.

Chinese Embassy spokesman Chu Maoming said the U.S. decision “contradicts the agreement between the leaders of the two countries that problems should be resolved through dialogue.”

China, he said, “strongly urges the U.S. side to reconsider the decision and reverse it as soon as possible.”

Rep. Phil English, Pennsylvania Republican, has introduced legislation with Rep. Artur Davis, Alabama Democrat, to require Commerce to use countervailing duty law for both market and nonmarket economies.

He said House members “intend to move forward to reinforce this message by clarifying our trade laws and giving American companies and workers, and the administration more aggressive support and tools to challenge China’s bad practices.”

House Ways and Means Committee Chairman Charles B. Rangel, New York Democrat, and Rep. Sander M. Levin, Michigan Democrat and chairman of the panel’s trade subcommittee, called the decision a “long overdue change in policy” and said changing the law “will remove any doubt or court challenge to make certain that every industry can file a case if they have been harmed.”

Commerce also announced preliminary results of investigations covering paper imports from Indonesia and South Korea and is scheduled to announce its final rulings in all three investigations by mid-June, although the law allows postponement until mid-October.

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