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Manufacturers Report China's Trade Violations

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September 8, 2005--U.S. manufacturers remain critical of most of Chinese trade policies, though they praise some reforms.

On Tuesday, the National Association of Manufacturers posted a report on its web site noting China's efforts to prevent its officials from using the country's value-added tax to inflate domestic prices of U.S. manufactured goods. However, the NAM report also described how China's trade policies disadvantage U.S. firms at home and abroad, and violate China's covenant with the World Trade Organization.

NAM's report is based largely on anecdotes reported by its members who have heard from suppliers, and even from competitors, that their Chinese counterparts are receiving subsidies in the form of low interest loans and special tax rebates. The WTO prohibits most subsidies because they artificially lower costs of production and enable companies to undercut competitors' prices unfairly.

U.S. manufacturers also claim that the Chinese government has done little to curb copyright violations and patent infringement.

William Primosch, senior policy director at the National Association of Manufacturers, said his members have noticed a proliferation of Chinese counterfeits of manufactured goods like personal care and hygiene products, specialized industrial equipment, and parts for automobiles and aircraft.

Uniweld of Fort Lauderdale, Florida, a manufacturer of refrigeration testing equipment, estimated that it lost $1 million in sales because Chinese companies have sold counterfeit products to customers in Saudi Arabia and the United Arab Emirates.

The NAM report also detailed Chinese policies that make it infeasible for U.S. firms to certify compliance with local standards. Steel manufacturers, for example, must contract private inspectors to ensure compliance with technical standards, even if this requires flying to them to plants in the U.S.

"Forcing U.S. companies to have to hire Chinese firms and pay their expenses to come over here and inspect their factories is just another kind of trade barrier that favors Chinese companies," said Primosch.

Currency manipulation remains manufacturers' foremost complaint, according to Primosch. A recent report by the Manufacturers' Alliance estimated that the Chinese currency -- the Yuan -- was undervalued by 25% to 50%, allowing Chinese companies to undercut prices of U.S. goods in international markets.

Last updated: Sep 8, 2005




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