Rejection Gives China Artificial Trade Advantage

WASHINGTON -- The United States Trade Representative (USTR) today announced the dismissal of a petition to investigate whether China provides basic, internationally recognized labor rights to its workers.  The petition, filed in June 2006 by Ways and Means Trade Subcommittee Ranking Member Benjamin L. Cardin (D-MD), Rep. Chris Smith (R-NJ) and leaders from the AFL-CIO, was the second attempt to force action to level the playing field for U.S. workers, businesses and farmers. 

“The Bush Administration has failed to address the challenge of China's unfair trade practices,” said U.S. Rep. Benjamin Cardin (D-MD), the Ranking Democrat on the Ways and Means Subcommittee on Trade.  “They must do more and this was an important missed opportunity.”

The petition, filed under Section 301 of the Trade Act of 1974, called for the USTR to investigate China for a “persistent pattern of conduct” denying basic international labor standards for workers.  Despite steady growth in the U.S. trade deficit with China, previous petitions and legislation seeking enforcement of existing trade laws and accountability for China’s violations of those laws have fallen on deaf ears within USTR.

“I am deeply disappointed in the USTR’s decision, as the evidence of worker exploitation in China is overwhelming. It was my hope that the USTR would have seized this petition as a chance to correct this flawed policy that continues to lead to worker exploitation and has resulted in over 1.3 million jobs lost here at home,” said Rep. Christopher Smith (R-NJ).

The petition called for the USTR to initiate an investigation into China’s practices under section 301, based on a “persistent pattern of conduct” that denies basic international worker rights within the meaning of section 301(d)(3)(B)(iii).  Section 301 of the 1974 Trade Act defines a violation of basic international worker rights as a practice that is “unreasonable or discriminatory”.

Specifically, the petition outlined three WTO consistent actions to be taken against China pending the outcome of USTR’s investigation:

1.  Trade remedies and compliance benchmarks - USTR must immediately implement a program of positive economic incentives to induce the Chinese government and companies to comply with basic labor standards.  If China fails to bring its labor standards into conformity, USTR should pursue all available, WTO-consistent remedies against China.

2. Binding Agreement - USTR should negotiate a binding, WTO-consistent agreement with the Chinese government, stipulating its cooperation with a program of compliance. Every six months thereafter, USTR must assess China’s compliance with workers’ rights obligations and adjust remedies accordingly.

3. Corporate Disclosure of Working Conditions - The President should implement rules requiring U.S. corporations to disclose wages, hours and working conditions of their affiliates and contractors in China.  These rules are necessary to verify that the Chinese government and corporations are actually complying with the necessary labor standards.

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