Date: 1984-07-26
Speaker: PHILIP M. CRANE (republican)
Chamber: H

Mr. Chairman. I rise in opposition to H.R. 4784. Despite our initial intent. the Committee on Ways and Means has reported a protectionist piece of legislation which will threaten the ability of the United States to maintain a leadership role in furthering the cause of free trade. This bill would invite retaliation on the part of our trading partners because it directly violates international trading agreements. H.R. 4784 stretches and adapts internationally accepted definitions to specific import problems particular U.S. industries are facing. In considering this legislation we must keep in mind that other countries will not hestitate to adopt similarly contrived definitions of subsidy and dumping against our exports. The disruptive effect this would have on our trading relationships is enough to outweigh all the other beneficial changes in the bill. The upstream subsidy section is an attempt to write into law a unilateral action against primarily Mexican products made with natural gas supplied by the Government to domestic operations at a price which covers the cost of production. but is lower than the U.S. price or the world price. Several U.S. industries disagree with the Mexican practice of exporting natural gas to export markets at the higher prevailing world price. Internationally agreed practice. however. has been not to treat the comparative advantage of a country as a subsidy if it is generally available to all local producers. whether they be exporters or producers for the home market. and whether they are nationals or foreign investors. This practice rests on the assumption that all sovereign governments ought to be able to allocate resources in a way they believe most beneficial to the longterm economic and social development of their country. While this II17912 policy does not address every inequity. it has been adhered to because opening up all generally available subsidies to countervailing duties would be unworkable. Such a practice on our part would give us little recourse when duties were applied to U.S. exports produced with generally available subsidies in this country. Even if our trading partners stick strictly to the natural resource limitation in the bill. U.S. exports of agricultural and textile products would still be vulnerable. The second dangerous provision would extend existing dumping laws to cover foreign products whose components were supplied at an alleged dumped price. Besides being in violation of the General Agreements on Tariffs and Trade. this provision would be impossible for the Commerce Department to administer in any fair or defensible way. A dumping duty can be applied under current law when a product is shown to be sold in the United States at a price that is less than the fair market value in the home market. This is measured on an individual firmbyfirm basis. In trying to extend dumping duties to cover component parts. the authors of this section have been forced to measure dumping of a component part using an aggregate price in the home market as the benchmark. This would have the effect of penalizing suppliers of components who were efficient enough to supply their product at a price lower than the local industry average. Also the bill uses a dumping definition that has not been accepted internationally. Producers selling goods in their home market at below cost of production. for example. is not considered dumping. The proponents of the bill have failed to explain during any of our committee meetings how this provision would be administered. The fact is it would require numerous simultaneous dumping investigations on many products. multiplying workloads at the Commerce Department with no hope of ever fairly resolving the problem at hand. A purchaser of components may have no idea he is buying dumped products. In order to defend himself against a dumping charge he and the Commerce Department would have to rely on information the component supplier would have no incentive to provide. Mr. Chairman. our international trading system cannot long survive if the United States resorts to such contrived interpretations of internationally agreed standards in order to please isolated groups. In my view. it is our responsibility to resist requests for further import restrictions. The best defense the United States has against unfairly traded imports is to uphold internationally agreed precepts of the General Agreement on Tariffs and Trade. This is the only way we will discourage our trading partners from erecting more import barriers that harm our successful export sectors. There is little justification for compromising the future of U.S. industries that are most involved in world markets in order to shield other industries having difficulty facing competition from abroad. H.R. 4784. I believe. would be one more step in that direction. I urge my colleagues to defeat the bill and to vote yes on the motion to recommit.