Quality Magazine

NAM Supports Dispute Settlement Affecting U.S.-China Trade Relationship

June 30, 2009

WASHINGTON, D.C.-The National Association of Manufacturers (NAM) Vice President for International Economic Affairs Frank Vargo issued the following statement expressing strong support for the announcement by U.S. Trade Representative Ron Kirk that the United States and the European Union are initiating dispute settlement procedures in the World Trade Organization (WTO) regarding China's export restraints on a range of raw materials important to U.S. manufacturers:

China’s export restriction of nine key raw materials has distorted trade and caused economic injury to NAM members. The NAM has raised this issue repeatedly with U.S. government officials because China’s actions have had the effect of subsidizing Chinese producers by allowing them to pay a lower price for those materials than U.S. companies. In our view, this is a clear violation of commitments China made when joining the WTO.

It is regrettable that China did not resolve this issue during the extensive bilateral discussions that preceded this filing. As Ambassador Kirk said today, after two years of discussion on this issue with the Chinese government, we are “well past the time” when China should have taken action to resolve the issue. The NAM fully endorses the use of WTO dispute settlement procedures when a bilateral resolution is not forthcoming.

The NAM supported China’s membership in the WTO so that it would be bound by international trade rules, including the provisions for resolving trade disputes. The decision by the Obama Administration to file this case is in fact a further sign of maturity in the U.S.-China trade relationship.

It is a measure of the importance of this issue that the Administration was joined by the European Union in bringing this action. China’s export restrictions affect other companies around the world, not just U.S. firms. As the case moves forward we hope even more countries will join in urging a solution.

I note that in some previous WTO cases, as China focused on the specific complaints and its obligations, it voluntarily came into compliance. I hope this will again be that case so that lengthy WTO litigation will not be necessary.

The NAM wants to see a robust, healthy, long-term trade relationship with China. That relationship must include adherence to the global trade rules that China committed to follow. We congratulate Ambassador Kirk and his excellent team at USTR for addressing this very complex issue.

For more information, visit www.nam.org.