To encourage the People's Republic of China to fulfill its commitments under international trade agreements, support the United States manufacturing sector, and establish monetary and financial market reforms.

Mr. Speaker, our manufacturing base is slowly evaporating before our very eyes. Just last week, Rockford, Illinois-- the main city I represent--lost 3 facilities. Over 1,200 workers in a town of 150,000 lost their job last week. Over 2.8 million manufacturing jobs have been lost since July 2000. Manufacturing now just makes up 14 percent of our

Gross Domestic Product. Yet, few people in Washington, D.C. are truly aware of this problem because this town doesn't produce much except paper.

There are many causes to the problems facing manufacturing: high health care and energy costs; legal liabilities; a staggering tax and regulatory burden; an outdated export control system; a government procurement system that thinks that it is OK to buy abroad; and an unfair global trading system.

I am proud to stand with Representative Phil English today in trying to bring about some relief in the trade area. The United States faces huge challenges with China. We all recognize and appreciate the difficulties the Chinese face as they integrate into the world economy. China is to be commended for going down a path towards more free markets and away from a planned economy. They have over 1.2 billion people and tens of millions of people enter their workforce each year. China must grow about eight percent a year just to keep even as they try to integrate new workers into the economy and also provide real employment for former workers at failed state-owned enterprises.

However, while acknowledging these challenges, we also must not allow the nations of the world to expect the United States to be the only global economic growth engine. It is in China's long-term best interest to address the real problems contained in this resolution. It is time for China to promote economic growth within their country mainly by selling the products made in their nation to their own people--not using the United States as a pressure relief valve.

Plus, China should take a cue from one of our great industrialists-- Henry Ford--and pay their workers sufficient wages so that they can afford the products they are making for U.S. consumers.

Yes, China has honored many of its WTO commitments. But it has also not lived up to all of its commitments to the WTO. We have given China the benefit of the doubt for too long. While we are grateful for China's willingness to buy more U.S. products, this is not enough. Now is the time to ratchet up the pressures and if necessary bring a trade case through the WTO process to force full compliance of China's commitments. Our manufacturers have taken it on the chin for too long now.

For example, having very low taxes imposed on Chinese semi-conductor manufactures but taxing imported semi-conductors at a much higher rate is outrageous. We're struggling to replace our Foreign Sales Corporation/Extraterritorial Income tax regime due to a WTO challenge from Europe; however, this Chinese tax discrimination policy hasn't been challenged in the WTO system yet. Does that make any sense? The National Association of Manufacturers has many more examples, which I ask unanimous consent to include in the Record.

I'm also grateful to Representative English for including a good deal of the language in H. Res. 414 dealing with Chinese currency manipulation from the legislation I authored along with my good friends and colleagues Representatives Mike Rogers, of Michigan, Charlie Stenholm of Texas, and Baron Hill of Indiana. I am especially pleased that the House of Representatives will go on record today in opposition to these policies that place up to a 40 percent tax on U.S. exports to China and up to a 40 percent discount on Chinese imports into the United States. Is it any wonder why our manufacturers are crying out for relief? This resolution is a good first step towards final action on H. Con. Res. 285, which, if diplomacy fails, calls for initiating a Section 301 trade case to impose trade sanctions against nations that manipulate their currencies for a trade advantage.

Let me also remind my colleagues that China is not the only nation that deliberately undervalues its currency. Japan, Korea, and Taiwan also vigorously intervene in currency markets to prevent their currency from strengthening against the U.S. dollar. Passage of this resolution today should not undermine our resolve to combat the problem of unfair foreign currency manipulation of other nations.

Prior to his departure for the Asia Pacific Economic Council conference, President Bush said we must make sure that ``currency policies of a government don't disadvantage America. Fair trade means currency policies [are] fair.'' We should strongly support passage of H. Res. 414 today. But we should also work towards ensuring passage of H. Con. Res. 285 if timely progress is not made towards accomplishing the goals set out in this resolution and if countries including Japan, Korea, and Taiwan do not halt the practice of undermining the value of their currency to boost their export potential.

Again, Mr. Speaker, I urge my colleagues to support H. Res. 414.

National Association

of Manufacturers,

September 10, 2003. Review of China's Compliance With Its WTO Accession Commitments

Areas of Concern

Currency undervaluation;

Subsidized exports;

Counterfeiting and IPR violations;

Discriminatory VAT taxes;

Unjustified product labeling requirements;

Inappropriate standards and concerns about CCC mark

procedures;

Restrictions on trading rights;

Lack of action on auto financing regulations;

Problems with Tariff Rate Quotas; and

Slow progress on transparency.

Overview

The National Association of Manufacturers (NAM) welcomes

the opportunity to comment on China's compliance with

obligations accepted as a WTO member and commitments made in

conjunction with accession to open its internal market to

foreign products and services. The NAM supported China's

membership on the condition that it would take meaningful

steps to adhere to these obligations and commitments and

become a responsible participant in the international trading

system.

Trade with China is of immense importance to many U.S.

manufacturers. The Chinese market is set to become one of the

largest in the world within the next several years. Chinese

imports are expected to exceed $380 billion in 2003, making

China the world's third largest importer after the United

States and Germany. At the same time, China is rapidly

becoming a major exporter of industrial goods, and the range

of industrial products exported has continued to grow at a

rapid pace. China's expanded participation in the global

marketplace, then, offers both important new commercial

opportunities as well as challenges resulting from increased

competition in the U.S. and foreign markets.

NAM members want the United States to have a positive trade

relationship with China. However, they also want a level

playing field for competition. In that regard, we are hearing

increasing concerns about unfair Chinese trade and currency

practices and China's failure to provide the same kind of

access to U.S. goods and services in the Chinese market that

Chinese goods and services enjoy in the U.S. market.

As China concludes its second year as a WTO member, its

compliance record is decidedly mixed. While U.S. exports to

China continue to increase (by 24 percent in the Jan.-June

2003) and a growing number of U.S. companies are trading and

investing there, the NAM has also received far more

complaints about unfair Chinese practices than in the

previous year.

NAM members recognize that China is still in transition to

a market economy and in the process of phasing in certain WTO

market-opening commitments. However, because China has

quickly becomes such an important global importer and

exporter, it is vital that the United States work to ensure

that China complies as fully as possible with all WTO

obligations and particularly those that have a significant

impact on U.S. economic interests.

NAM member companies and affiliated organizations have

reported the following concerns regarding China's WTO

compliance.

currency manipulation

By far, the NAM has received the greater number of

complaints about China's deliberate policy of undervaluing

its currency to gain unfair competitive advantage over U.S.

producers and those of other WTO member countries. Economists

have estimated that China's currency could be undervalued by

40 percent or more. The Chinese yuan has remained pegged to

the dollar at 8.28 for the past eight years despite an

extended period of robust economic growth, continuing trade

surpluses and a large build-up in foreign exchange reserves,

which exceeded $350 billion in July 2003.

Chinese officials have acknowledged that the pegging of the

yuan to the dollar is part of a deliberate strategy to

support Chinese industry and boost exports. This kind of

currency undervaluation for commercial gain goes against the

intent of the General Agreement on Tariffs and Trade (GATT),

which seeks to remove trade barriers and allow markets to

determine trade flows. Article IV, for examples, states that

``Contracting Parties shall not, by exchange action,

frustrate the intent of the provisions of this Agreement . .

.'' China's undervalued currency, in effect, acts as an

additional trade barrier to U.S. exports and an unfair

subsidy for all Chinese exports. We believe that Chinese

exchange rate policies do not comply with WTO obligations.

subsidized exports

We continue to receive reports from different industries

(e.g., tool-and-die, metal forming, steel and chlorinated

isocyanurates) that Chinese products are being sold in the

United States at prices so low that they could not even cover

the cost of raw materials and shipping much less full

production and marketing costs. A tool-and-dye company, for

example, reports that a Chinese competitor was selling a

product similar to one made in the United States for $40,000,

compared to the U.S. producer's price of $100,000. The U.S.

company maintains that the cost of the raw materials alone

would amount to $40,000, not including shipping, duties and

other costs. A U.S. producer of chlorinated isocyanuratrs,

which is used as a cleaning agent in swimming pools,

reports a similar situation. As a result of pricing which

appears to be below cost, Chinese exporters are expected

to increase exports of

this product by 400 percent in 2003 over 2002 levels.

These reports suggest the likelihood of widespread use of

subsidies, either direct or indirect, to help Chinese

exporters gain unfair competitive advantage in the U.S.

market. They merit further investigation by USTR and the

Department of Commerce. One source of indirect subsidy is

continued bank leading to money-losing and insolvent Chinese

manufacturers, often state-owned or state-controlled

enterprises. Since the Chinese banks providing these loans

are either state-owned or state-controlled, the Chinese

government bears responsibility for their lending practices.

U.S. steel producers note that the Chinese steel industry is

the largest-recipient of interest-rate subsidies authorized

by the national government. Since many of the companies that

benefit from either directed bank lending or subsidized

interest rates are engaged in international trade, they have

an unfair competitive advantage vis-a-vis U.S. based

companies, which must rely on private financing at market

rates.

counterfeiting and ineffective enforcement of ipr protection

While Chinese laws on intellectual property rights (IPR)

have improved considerably, the lack of effective enforcement

of the IPR protection remains a serious problem. Violations

of trademarks through product counterfeiting is rampant and

on a massive scale. The violations involve a wide range of

products, including consumer hygiene and health care

products, athletic footwear, pharmaceuticals, food and

beverages, motorized vehicles and even entire automobiles.

Pharmaceutical counterfeiting is now, according to U.S.

industry representatives, a serious public health concern in

China. We believe that the lack of criminal penalties for

counterfeiting, including jailing, prevents effective

enforcement of trademark and labeling violations.

We are also concerned about reports that local government

authorities are actually promoting the expansion of local

industry dedicated principally to counterfeiting. At a

minimum, local authorities are knowledgeable of counterfeit

production and taking no action to halt it. There appears to

be no mechanism for the national government to prevent local

governments from aiding and abetting counterfeiting by local

industry. In addition, the Chinese customs service has not

cooperated in blocking exports of counterfeit products even

when solid evidence of counterfeiting was provided. It is

claimed that, since the ``exporting'' of counterfeit products

does not constitute a ``sale'' of the products, the relevant

Chinese law did not apply.

Other IPR violations are also common. They include

unauthorized duplication of computer software, music films;

copying of designs; unauthorized use of patented technology;

and unauthorized use of U.S. product certification logos. The

makers of air conditioning and refrigeration equipment note

that the ARI (Air-Conditioning and Refrigeration Institute)

certification symbol was being used without authorization by

a Chines company. Efforts to have the Chinese government stop

this unauthorized use proved ineffective.

The pharmaceutical industry does, however, also report

improvements in intellectual property protection, notably by

the promulgation of a new regulation on data exclusivity for

clinical trials, as required in TRIPS and committed in

China's accession package.

Manipulation of VAT and Other Taxes

We have reports that China is manipulating the application

of taxes, notably the Value-Added Tax (VAT), to both restrict

imports and indirectly subsidize exports. For example, the

scrap recycling industry has told us that Chinese users of

imported copper and other scrap metals are deliberating

undervaluing their invoices to pay less VAT on the imported

metal. When the finished metal products are exported,

however, Chinese producers claim a rebate of the VAT based on

the metals' real import price. This results in a substantial

subsidy for the exported product that translates into lower

prices in the U.S. market. It also enables Chinese scrap

metal users to pay higher prices for scrap metal than their

U.S. competitors. Chinese customs and tax authorities have

not taken action to investigate these practices.

A major U.S. producer of semiconductors has also expressed

concern about continuing Chinese discrimination in the

application of the VAT on imported and domestically produced

semiconductors. China levies a 17 percent VAT on imported

integrated circuits. Domestically designed and produced

integrated circuits are taxed at VAT rates ranging from 3-6

percent. Integrated circuits produced in China but designed

abroad are taxed at 11 percent. This discriminatory treatment

of domestic and foreign ``like'' products violates Article 3

of the GATT.

Unjustified Labeling Requirements

In 2002 the Chinese Ministry of Health promulgated a new

regulation mandating the labeling of all genetically modified

(GM) food products. While the implementation of the

regulation was subsequently suspended indefinitely, the fact

that it remains on the books is already having significant

adverse economic effects and creating barriers to trade. Some

producers have ceased shipping these products in anticipation

of the regulation going into effect.

U.S. food producers have questioned whether the Health

Ministry's action was in conformity with China's WTO

obligations. The ministry did not provide a justification for

the labeling requirement based on an assessment of health

risks, which is a requirement of the Agreement on Sanitary

and Phytosanitary Measures. The Technical Barriers to Trade

Agreement (TBT) also suggests inadequate attention to the

treatment of ``like products,'' the question of whether the

labeling requirement addresses a ``legitimate objective'' and

the requirement to base technical regulations on

``performance'' rather than ``design'' characteristics.

Inappropriate standards and concerns about CCC mark system

Several NAM members have raised concerns about application

of technical standards and the CCC Mark system. With regard

to standards, China is requiring that certain products (e.g.,

electrical products) be manufactured only to ``international

standards'' as determined in the ISO or IEC. Other

``international standards,'' notably those developed in the

United States and widely used in the global marketplace, are

not allowed. This does not conform with the WTO TBT Committee

interpretation that ``international standards'' need not be

limited to ISO or IEC standards.

A second set of standards concerns relates to the CCC mark

system. China introduced the CCC mark system to comply with

WTO requirements for a single mark for like domestic and

imported products. It is, in that sense, a step forward on

standards and mark requirements. However, the inconsistent,

non-transparent and inflexible application of the CCC Mark on

a variety of products (e.g., electrical products, air

conditioning and refigeration equipment, and tires) has

created market access barriers and needlessly raised the cost

of importing products into China.

Generic problems include: the high cost of having Chinese

inspectors audit factories in the United States and other

foreign countries on compliance with the standards; continued

delays in allowing U.S. testing and certifying bodies to

certify compliance for the CCC mark; and lengthy delays and

relatively high cost of obtaining testing and certification

for the CCC mark in China.

Several other specific problems were noted. A major tire

company reported that several types of its bus tires that are

standard sizes in countries around the world cannot obtain

the required CCC mark because these sizes are not listed in

the Chinese National Standards. Another type of tire widely

on Chinese trucks is also not on the list and thus cannot be

sold by the U.S. company in China. Efforts to resolve this

problem with Chinese standards authorities and Chinese

customs have thus far been unsuccessful. In addition, the

company reports that local inspection offices appear to be

abusing their authority by requiring the re-inspection of the

company's Chinese-produced tires and confiscating tires which

they determine to be ``non-complaint'' with the CCC mark

standards.

Restrictions on Trade Rights of Joint Ventures

China is not fulfilling its commitment to allow foreign

joint ventures to import and sell products (e.g., tires,

automobiles, auto parts and industrial equipment) in China,

which was to have gone into effect on Dec. 10, 2002. A major

tire company, for example, reports that the Chinese

government has imposed additional restrictions on its trading

rights that were not anticipated when this concession was

negotiated. They include allowing only new joint ventures to

have this right and requiring the Chinese and foreign

partners to have separately done U.S. $30 million in trade

with China over each of the three preceding years.

lack of action on auto financing regulations

The Chinese government has committed to publish new

regulations governing the financing of automobile purchases.

Several NAM member companies have expressed concern about

slow progress on the regulations that were explicitly

promised in China's accession agreement. The U.S. government

should press for their prompt issuance to comply with WTO

obligations.

problems with tariff rate quotas and import certificates

Complications in implementing tariff rate quotas (TRQs) are

creating non-tariff trade barriers to U.S. feed products,

notably corn and wheat. Chinese authorities have delayed

issuance of regulations on the administration of the TRQ

system and introduced unreasonable licensing procedures.

There has also been a lack of transparency in the process

which makes it difficult to know which companies are granted

quotas. China has also violated its accession agreement by

redirecting quotas reserved for non-state companies to state-

owned companies.

A related problem that has affected soybean exporters is

the narrow window for using import permits under the AQSIQ

permit system. U.S. exporters have only 90 days to purchase,

transport and unload their products in China. These

restrictions are not only limiting U.S. commodity exports

sales but also restricting the operation of soybean

processing plants in China.

lack of transparency in trade regulatory process

Many companies complain about the lack of transparency in

the trade regulatory process and the difficulty in obtaining

current laws and regulations governing trade and

business operations. This is a continuing problem that should

lend itself to solutions in a relatively short time frame.

The U.S. government should press for concrete steps that

improve transparency at all levels.

William Primosch,

Director, International Business Policy,

National Association of Manufacturers.

Mr. Speaker, I move to suspend the rules and agree to the resolution (H. Res. 414) to encourage the People's Republic of China to fulfill its commitments under international trade agreements, support the United States manufacturing sector, and establish monetary and financial market reforms.

Mr. Speaker, I yield myself such time as I may consume.

Mr. Speaker, currently before the House is House Resolution 414, to urge China to live up to its international obligations which it has agreed to undertake upon joining the World Trade Organization in 2001. We consider this with a sense of urgency as we are running an historically large trade deficit and an enormous bilateral trade deficit with China.

Mr. Speaker, our trade deficit with China has doubled since 1998, and is likely to exceed $120 billion this year. It has become the single largest bilateral trade deficit in the world. And the most conspicuous feature of our lopsided trade partnership with China is China's state- sponsored mercantilism which has cost this country millions of manufacturing jobs.

When the Clinton administration embraced China's entry into the WTO, many of us hoped that China would adopt the disciplines of the global rules-based trading system. Unfortunately, we have been sorely disappointed. China continues to flout global trade rules at the expense of our manufacturers and workers. This cannot be allowed to stand. Americans can compete with any economic power in the world, provided there is a level playing field.

Mr. Speaker, our resolution would: One, show broad support for the administration's efforts to get China to abide by its international trade obligations; two, put Congress on record urging China to follow global trade rules; three, commit to working with the administration to encourage China to modernize its financial system and allow a flexible exchange rate; four, urge the administration to continue intensive discussions with Chinese leaders towards establishing a market-based valuation of their currency; and, five, state that the United States Government should intensify efforts to promote innovation, reduce costs, and level the playing field for the manufacturing sector.

Mr. Speaker, here are the facts, the IMF, APEC, and the group of seven finance ministers all have stressed the importance of allowing for greater flexibility in exchange rates. In the last month, every top official in the administration's economic and trade team, including President Bush himself, has visited China and implored its leaders to bring its trading practices up to global standards and allow their currency value to be dictated by the market.

Still, China's leaders have continued to stall. Our message today is the same as the administration's. They have told China time and time again if they want to have a healthy trade relationship with the United States, then they must be prepared to follow the rules. The message we are carrying today is among the most important that Congress will communicate this year. It is essential for the economic future of the next generation, for the future of good paying jobs in places like my home in northwestern Pennsylvania where we make things for a living, that we get this right.

Mr. Speaker, I reserve the balance of my time.

Mr. Speaker, I yield myself 15 seconds.

First, to respond to the gentleman, I point out that this administration has been willing to take on China on these issues, particularly on the currency manipulation, in a way that the last administration certainly did not. At a time like this, when the administration is directly involved with negotiations with the Chinese, this is precisely the kind of resolution that is not only appropriate, but is important to provide to show support.

Mr. Speaker, I yield 2\1/2\ minutes to the gentleman from North Carolina (Mr. Ballenger) who has been a leader in the fight on Chinese trade issues.

Mr. Speaker, I yield 1\1/4\ minutes to the gentleman from Georgia (Mr. Gingrey), a distinguished advocate of the interest of American workers.

(Mr. GINGREY asked and was given permission to revise and extend his remarks.)

Mr. Speaker, it is a privilege for me to yield 2 minutes to the gentleman from Michigan (Mr. Rogers).

Mr. Speaker, I yield 1\1/2\ minutes to the gentleman from North Carolina (Mr. Hayes), a distinguished advocate of fair trade.

Mr. Speaker, I yield 3 minutes to the gentleman from California (Mr. Dreier), the chairman of the Committee on Rules and one of the most distinguished advocates of free trade in the Chamber.

Mr. Speaker, it is a great privilege for me to yield 2 minutes to the gentleman from Wisconsin

(Mr. Ryan), a distinguished member of the Committee on Ways and Means.

Mr. Speaker, I yield 2 minutes to the gentleman from Wisconsin (Mr. Green), a very distinguished advocate of American workers.

(Mr. GREEN of Wisconsin asked and was given permission to revise and extend his remarks.)

Mr. Speaker, I have no further speakers beyond reserving the right to close.

Mr. Speaker, I yield myself the balance of my time.

Mr. Speaker, this has been an edifying debate. I particularly want to salute my colleague, the gentleman from Michigan on the other side of the aisle, who has been attentive to the issue of China trade for a long time and has been an example to many of us, including many of us on my side of the aisle.

I must say, though, I think the record needs to be made clear and this resolution needs to be put in context. It is more than a weak exhortation; it is an expression of support for the administration's efforts at a very critical time to challenge China and encourage them to float their currency and liberalize their trading regime. We sent Secretaries over to China to do more than give speeches. They have delivered a very powerful message, and it appears that the Chinese are beginning to listen. But I agree with the people on the other side: more needs to be done.

Our message today, Mr. Speaker, is that Congress will not stand on the sidelines while our industrial base is eroded and manufacturing jobs are lost forever.

Some adopt the rhetorical convention that criticism of China's trade policies amounts to protectionism. But Adam Smith himself would not have recognized China as a free market bulwark. The term that he would have used to describe China's economic policies is mercantilistic, and mercantilism has no place in today's global marketplace which is guided by a rules-based system where ``beggar thy neighbor'' is not part of the equation.

The goal of this resolution today is to encourage the leveling of the playing field in our trade relationship and create fair opportunities for both our employers and our employees.

This is a resolution that should ultimately unite Members with diverse districts and diverse philosophical backgrounds. It has drawn support from the National Association of Manufacturers, the U.S. Chamber of Commerce, the United Steelworkers of America, and the American Iron and Steel Institute.

Mr. Speaker, this is precisely why I strongly encourage all of my colleagues to send a message to the administration, send a message to China, and send a message to the world that we are watching and we are proceeding from here, starting with this resolution, proceeding with hearings in the Committee on Ways and Means later this week, and proceeding from here with a much stronger trade policy that is determined to fight for our industrial base.

Mr. Speaker, I yield back the balance of my time.

Mr. Speaker, on that I demand the yeas and nays.

Mr. Speaker, like all Americans, I am concerned about the loss of jobs in America's manufacturing sector and the role currency manipulation plays in that loss. For many years, I have warned my colleagues that America's monetary policy is endangering America's economy. The economic difficulties currently facing this country are a classic example of the harm resulting from a boom-and-bust cycle caused by an inflationary monetary policy. An open debate on monetary issues is therefore long overdue.

However, instead of debating America's monetary policy, we are debating China's monetary policy. Specifically, the goal of this resolution is to pressure China to change the valuation of its currency. Whatever short-term benefit our manufacturers may gain from this action, the policies urged today are not in the long-term interest of the American people.

In arguing for fluctuating rates, the backers of H. Res. 414 are demanding that the Chinese Government adopt an irrational policy. A sound economy requires a sound and dependable unit of economic measurement. Yet, by definition, under fluctuating rates the currency, which serves as the basic unit of economic measurement, will not be sound and dependable. Instead, that value will change depending on the whims of politicians and the perceived economic needs of politically powerful special interests.

China, in fact, has done very well with a fixed measurement of value. China's economic growth rate is high; China is also exporting many products into our market while our domestic producers are suffering. Therefore, China makes a good scapegoat for our economic problems. Demanding that the Chinese government adjust its currency is a convenient distraction from addressing the real economic problems facing our country.

Instead of having fluctuating currency exchange rates and the inevitable instability that accompanies them, we should be working to establish a gold-backed currency whose value is determined by the market. This would provide an objective measurement of the value of economic goods and services and thus strengthen the economy by freeing it from the negative effects of our unstable monetary policy.

I would also urge my colleagues to consider the benefits we receive from our relationship with China. Of course, consumers benefit from lower-priced goods. Adopting the policy urged by supporters of this bill would cause consumer prices to increase, thus reducing consumers wealth. Other producers would suffer as a result of the consumers decreased purchasing power.--While there is not an organized lobby arguing against the-policy recommendations of H. Res. 414, I doubt many of our constituents want us to increase the prices they pay for goods and services.

Congress should also consider how the Chinese benefit the United States Government by holding our debt. The dollars the Chinese acquire by selling us goods and services must be returned to the United States. Since the Chinese are not buying an equivalent amount of American goods and services, they are using the dollars to finance our extravagant spending.

In fact, Mr. Speaker, our ability to continue to fund the welfare- warfare state without destroying the American economy depends on foreigners buying our debt. Perhaps we should think twice before we start bullying and browbeating our foreign creditors to change their economic or other polices to our liking.

H. Res. 414's underlying premise is that sovereign countries have a duty to fashion economic policies that benefit the United States and it is a proper concern of Congress if these countries fail to do so. H. Res. 414 attempts to justify Congressional interference in the internal economic affairs of China by claiming that China is not living up to its obligations as a member of the World Trade Organization (WTO). I would remind my colleagues that the WTO has oftentimes ruled against the United States and Congress is right now changing United States tax laws to please the WTO. Ceding control over United States tax and trade policy to this international organization violates the United States Constitution and is contrary to the interests of American citizens. Therefore, it is not wise to endorse the WTO process by encouraging other countries to submit to WTO control.

Instead of promoting global economic government, the United States Congress should reform those policies that reduce our manufacturers' competitiveness. Recently, a financial journalist visited with businessmen who are launching new enterprises in China. When he asked them why they chose to invest in China, they answered: ``It is so much easier to start a business in China than in the United States, especially in places like Massachusetts and California.'' This answer should send a clear message to every lawmaker in America: the taxes and regulations imposed on American businesses are damaging economic growth and killing jobs. If we were serious about creating jobs, we would be working on an aggressive agenda of cutting taxes and repealing needless regulations.

Congress can also improve America's competitive position by ending the practice of forcing American workers to subsidize their foreign competitors through organizations such as the Export-Import Bank and the International Monetary Fund. I have introduced the Steel Financing Fairness Act (H.R. 3072) to accomplish this goal. H.R. 3072 prevents taxpayer funds from being sent to countries, such as China, that subsidize their steel industries. Of course, our ultimate goal should be to end all taxpayer subsidies of foreign corporations and governments.

In conclusion, Mr. Speaker, I remind my colleagues that stability in currencies is something we should seek, not something we should condemn Instead of urging China to adopt a floating rate, Congress should be working to adopt a stable, commodity-backed currency whose value is determined by the market and encourage other countries to also adopt a market-based currency. This will benefit American workers, entrepreneurs, and consumers. Congress should also strengthen America's economy by reducing taxes and repealing unnecessary and unconstitutional regulations and stop forcing American taxpayers to subsidize their foreign competitors.

Mr. Speaker, I yield myself such time as I may consume.

Mr. Speaker, this resolution is a weak resolution. It does not suggest any specific actions, and this is consistent with the way that this administration, the Bush administration, has approached trade issues with China.

It is not as if these issues suddenly appeared. They have existed, they have persisted for several years. And there have been some specific tools available for the administration to use. They have not used some of these tools, and others they have not used well.

These are the tools. First, the annual review process within WTO, this annual review process was called for in the U.S. PNTR resolution. It was specifically called for. It was worked for within the WTO, and it was in the final agreement with China when they acceded to the WTO. But the U.S., in this process, did not press China to act on major issues. China said that they did not need to respond in writing to the issues that were raised in the annual WTO review. This has diminished the importance of this significant mechanism.

Secondly, the PNTR legislation that we passed also required an annual report by the administration on China's compliance with its WTO commitments. That report was weak, and it did not press China on the key issues of trade.

Third, the USTR has not used, at any point, formal consultations in any of the sectors or on any outstanding problem, either through use of section 301 or directly in the WTO, whether the outstanding issues related to agriculture, for example, corn or cotton or fertilizers; in the manufacturing sector, whether it was semiconductors, heating and air conditioning, auto or auto parts; or whether it was services, including financial services. There was really little effort, in fact none, in formal consultations relating to the distribution requirements that were clearly laid out in China's WTO accession. And there has not been use of the formal consultation process relating to China's undervalued currency, and there has been none relating to intellectual property.

This administration has not used the specific China safeguard that we worked so hard to place in the China PNTR legislation. Instead, the administration turned down the first two cases that were brought before it. So in a word, instead of taking the lead, getting out in front of the rising concern

about China, the Bush administration left a vacuum, and this vacuum has been filled by rhetoric, including that coming from the administration.

Mr. Speaker, this resolution is essentially rhetorical. It does not call for any specific action. It talks instead about commending the administration when I think that there were serious omissions of opportunity, and then it says it encourages in the second paragraph. And then as to currency, it says the Chinese economy would benefit. In the fourth, it says the House of Representatives will continue to monitor. In the fifth it says the House of Representatives urges the administration to continue intensive discussions. So as I said, this resolution does not call for special or specific action.

Mr. Speaker, I just want to say to the gentleman from Pennsylvania (Mr. English), and especially to the administration, that no one should interpret a vote for this resolution as an endorsement of the way this administration has handled the growing issues with China.

I hope there will be other resolutions. We are going to have a hearing in the Committee on Ways and Means beginning tomorrow on China, and I guess it will continue over to Friday. This will be an opportunity for us to probe the places where there have been missed opportunities, the places where there need to be specific actions, the place where we can substitute, for rhetoric, something very specific which will lead, I hope, to actions relating to the trade relationships between our two large and important economies.

Mr. Speaker, I reserve the balance of my time.

Mr. Speaker, I yield 1 minute to the gentleman from Michigan (Mr. Kildee).

Mr. Speaker, I yield 4 minutes to the distinguished gentleman from Vermont (Mr. Sanders).

Mr. Speaker, I yield 4 minutes to the gentleman from California (Mr. Becerra), a gentleman who is very active on these issues as a member of the Committee on Ways and Means and its Subcommittee on Trade.

Mr. Speaker, I yield 1 minutes to the gentleman from California.

Mr. Speaker, I yield 1\1/2\ minutes to the gentleman from California (Mr. Becerra).

Mr. Speaker, I yield myself the remaining time.

Mr. Speaker, it is interesting. I listened to the two gentlemen from Wisconsin, and one said it is a dire situation, and the other said that rhetoric is not a substitute for specific steps. And that is the shortcoming in this resolution. It is a weak one.

I want to emphasize, there are specific steps that the administration should have taken and some that it can still take. I want to be very clear about that. First, the annual review, WTO, I believe it is now going on. The administration should use that as an opportunity to press China on its shortcomings as to its commitments when it went into the WTO. It did not press last time. It needs to this time.

Secondly, the annual report. It was weak. It should have been much stronger.

And there are also specific steps under our statutes that can be taken and under WTO regulations when China does not live up to its obligations. We

can use section 301 to start an inquiry, or we can go directly into the

Mr. Speaker, I thank the gentleman for yielding me time.

Mr. Speaker, House Resolution 414 sends a message to China. But if this is as strong a message that we can send to China, we are in trouble. We could

do much better than this. We can send a message that is very clear and very responsible about what we would expect of any trading partner, of anyone who wishes to be treated with dignity when it comes to trade with us as well.

In the last 3 years, Mr. Speaker, Americans have lost 3.2 million jobs; 2.5 million of those 3.2 million jobs have come from the manufacturing sector.

Now, if it does not hurt enough, let me just give you some numbers. California, almost 300,000 Americans without jobs as a result of the manufacturing sector losing them; Illinois, 125,800 jobs lost in the last 3 years, according to the September 2003 job numbers; Indiana, 67,000; Michigan, 127,000 Americans who have lost their jobs; New York, 132,000; North Carolina, 145,000 Americans without jobs in the manufacturing sector; Ohio, 151,000 jobs lost for Americans; Pennsylvania, 132,000 jobs lost; Wisconsin, 73,000 jobs lost to Americans in the manufacturing area, many of these going to countries like China.

On top of that, today we are saddled with a national debt of more than $3.3 trillion. This year's budget deficit alone, $370 billion. Next year, we are told our budget deficit will probably reach $500 billion. In each case, these are record deficits for this country.

Our trade deficit, just in what we do globally in trade with other countries, $482 billion in 2002. That is how much we were spending more by buying goods from other countries than they were buying from us. And if we keep on that same pace in 2003, we are going to have an even larger trade deficit with the world.

How much of that comes from China? Well, this past year alone, $103 billion in deficit trading with China, and at the end of this year it will probably be at about $115 billion that we will have spent more in purchasing goods from them than they will have spent in purchasing goods from us.

This week Warren Buffet, one of the wealthiest men in America, said our country is like a rich family that possesses an immense farm. ``In order to consume 4 percent more than we produce,'' which is in essence what our trade deficit means, we are consuming more than we are producing, ``we have been both selling pieces of the farm and increasing the mortgage on what we still own.''

Mr. Buffet said that our trade deficit has worsened to the point that our country's net worth is being transferred abroad at an alarming rate. He predicts that foreign ownership of America's assets will grow by about $500 billion a year. That translates to about 1 percent annually of our wealth being placed in foreign hands.

Mr. Speaker, something needs to be done, and H. Res. 414 is not enough. It is time for us to investigate what the Chinese are doing, it is time for us to take safeguards to protect American industries and American jobs, and it is time for us to use the powers that we have under the Trade Act to investigate whether China is complying with its obligations under the World Trade Organization's regime. It is time to do it. Just talking about it will not make it happen. Let us take some action. House Resolution 414 may be a start, but it certainly is not enough.

Mr. Speaker, I thank the gentleman for yielding me this time. I think we have to make sure we clarify a couple of things.

First, I do not think anyone would propose that our country become China when it comes to its manufacturing base and how we treat our workers and the type of product we put out. Certainly we have to do a number of things to continue our competitiveness with countries abroad, but there is no way that America will ever get to compete with countries that are paying 50 cents an hour for wages. And I hope that no one is recommending here that we spiral downward to try to compete; in other words, this become a race to the bottom in order to be able to compete and manufacture products abroad.

My good friend, the gentleman from California (Mr. Dreier), mentioned that we are about to celebrate Halloween and all of those costumes that our kids are going to be wearing, if you take a look at the label, most have been made in places like China. They were made in America before. But I do not believe anyone is suggesting that we now pay Americans 50 cents an hour to manufacture and fabricate garments like that in order to be able to compete with China.

At the same time, look at the bill. The only thing it calls for, well, first it commends the President and his administration for continued efforts to engage the government of the People's Republic of China and to encourage China to fulfill its commitments. Encourage. And then it continues to say the House of Representatives encourages the People's Republic of China to meet its commitments. We encourage. We encourage. We closely monitor. There is nothing this does.

We should investigate. We have the power under statute to investigate the trade violations committed by countries like China. That is what this bill should say, not that just we encourage the Chinese to do something better.