March 29, 2024

U.S. Says Some Chinese Subsidies Violate Trade Rules

WASHINGTON — Under pressure from Congress to do more to confront China on economic issues, the Obama administration has notified the World Trade Organization of nearly 200 Chinese subsidy programs, saying many of them may violate free trade rules.

Ron Kirk, the United States trade representative, said in a statement on Thursday that many of the subsidies had been identified as part of a yearlong American investigation of how the Chinese government helped bankroll the rapid growth of its clean energy industries. In solar and wind power, in particular, American companies have had trouble keeping up with Chinese competitors.

The action by Mr. Kirk’s office comes as the Senate is considering a bill challenging China’s manipulation of its currency as a trade tool. The Chinese government strongly condemned that bill, and House Republicans and the White House have also expressed reservations.

But with the trade representative’s long list of ways that China subsidizes its domestic industries, the Obama administration was now taking a more head-on approach to Chinese trade. Whether or not any of those subsidies violate international trade rules, the American trade office says China is already out of bounds by not having reported them to the W.T.O.

The W.T.O. requires member countries to disclose details of their subsidies every two years. But China has disclosed its subsidies only once since it joined the W.T.O. in 2001.

The goal of requiring the reports was to help other countries study the subsidies and determine whether any of them violated trade rules that prohibit using government money either to help companies buy market share in other countries or to discourage imports.

The only time China filed a report was in 2006, and it was a short list that included only subsidies at the national level — not China’s numerous provincial or municipal subsidies.

Notifying the W.T.O. about China’s undisclosed subsidies would not set off any automatic moves to consider sanctions. In fact, China already agreed in recent years to repeal or let lapse about half of the subsidies on the administration’s list in efforts to resolve parts of other trade disputes.

And in the past, members of Congress who demand tougher trade action against China have shown little interest in technical moves like the one taken by the trade representative Thursday.

Of the subsidies still in place, half have been identified as part of a yearlong American investigation into how the Chinese government has helped bankroll the rapid growth of its clean energy industries.

The rest represent a grab bag of miscellaneous policies, including a national exemption from certain stamp taxes and the provision of low-cost land to businesses in China’s Anhui province. The American filing with the W.T.O. said that many of these were “actionable” as violations of free trade rules.

But it is the clean energy subsidies that might be most significant. Through various types of support, China has helped transform its wind turbine and solar panel manufacturers from also-rans into the world’s dominant producers in just five years. The American solar panel industry has been crumbling in the face of plunging prices forced by Chinese exports, with three companies — Solyndra, Evergreeen Solar and SpectraWatt — filing for bankruptcy in August alone.

Solyndra’s collapse has generated its own controversy within the United States, with critics saying the Obama administration made a bad bet in providing $527 million in federal loan guarantees to the company.

One of the largest non-Chinese survivors in the solar industry, SolarWorld, blamed Chinese subsidies in part for the closing last week of a 186-employee factory in Camarillo, Calif.

“Pervasive and all-encompassing Chinese subsidies are decimating our industry,” said Ben Santarris, a spokesman for SolarWorld, which is based in Germany but has more than 1,100 employees in the United States, even after the Camarillo factory closing. SolarWorld has been holding discussions with American officials, trade lawyers and competitors on how to respond to the Chinese subsidies, Mr. Santarris said. Commerce ministry officials in China have repeatedly denied that the country’s subsidies for clean energy industries violated W.T.O. rules. The commerce ministry was closed this week for national holidays.

In examining China’s clean energy subsidies over the last year, the Obama administration has already filed one complaint to the W.T.O. That filing involved a subsidy by Beijing of $6.7 million to $22.5 million for each wind turbine manufacturer that used parts made in China instead of imported parts. China responded by agreeing last June to revoke the subsidy.

But wind industry analysts have described that subsidy as only one of many, and not especially vital to the Chinese industry’s financial strength.

Article source: http://www.nytimes.com/2011/10/07/business/us-says-some-chinese-subsidies-violate-trade-rules.html?partner=rss&emc=rss

Consumer Protection Nominee Promises Cooperation

WASHINGTON (AP) — President Barack Obama’s nominee to head the new Consumer Financial Protection Bureau is promising to be accountable to Congress and is playing down the lawsuits his agency will be able to file against banks and other financial institutions.

Even so, Richard Cordray’s chances of winning Senate approval to lead the agency remained uncertain. Republicans have promised to block any nominee to head the agency unless the bureau is changed in ways they say will make it more accountable. Democrats say those changes would weaken its powers.

In remarks prepared for his confirmation hearing Tuesday with the Senate Banking Committee, Cordray said his experience as former Ohio attorney general taught him that litigation can be slow, costly and unnecessarily acrimonious. He said he would use lawsuits “judiciously,” and noted that the bureau has other powers to resolve problems, including issuing rules, writing reports and examining large banks and many nonbank institutions.

“Enforcement, of course, will still have an important role at the consumer bureau,” he said.

In a bid to reach out to Republicans, Cordray also said that if confirmed, “I promise that you will have one person who will always be accountable to you for how we are carrying out the laws laid down by Congress and I will be eager to hear your thoughts about how we should do our work.”

The new bureau, which began functioning in July, was created after the financial crisis of three years ago. The bureau was part of the market regulation overhaul that President Barack Obama pushed through Congress last year over solid GOP opposition. It is designed to protect consumers taking out loans, using credit cards and making other financial transactions.

Obama appointed Harvard law professor Elizabeth Warren, a longtime consumer advocate, to help set up the agency. But facing staunch Republican opposition, he never nominated her to head it despite lobbying on her behalf by liberals and consumer groups.

Though Democrats control the Senate, the chamber’s 44 Republicans have said they will oppose any nominee without a revamping of the bureau that would include replacing the director with a bipartisan commission and giving Congress direct power over its budget. Democrats in the 100-member Senate can only count on 53 votes to end delaying tactics — seven short of the 60 needed to do so.

“Opposition to or support of Mr. Cordray’s nomination will become relevant as soon as the president agrees to make the structural changes we’ve requested,” Sen. Richard Shelby of Alabama, top Republican on the banking panel, said in a written statement. Shelby said that until then, Republicans still say, “No accountability, no confirmation.”

Hoping to bolster Cordray’s chances, five state treasurers — all Democrats — released a letter Monday that they sent last week to Shelby and banking committee chairman Tim Johnson, D-S.D., supporting Cordray, a former Ohio treasurer.

“Rich understands that sober, conservative and even-handed fiscal management produces the best financial results over the long term,” they wrote.

Article source: http://feeds.nytimes.com/click.phdo?i=884bf3cc57a8973bb54b81ef328f4079

Economix: Conspiracy Theories About the G.O.P. and the Economy

In the last few days, several readers, economists and radio hosts have asked me whether I buy the most cynical interpretation of the debt crisis stalemate: maybe Republicans are reluctant to raise the debt ceiling, or are calling for austerity measures that could slow the recovery, because they actually want the economy to do badly. That way voters will demand a change in political leadership, and vote more Republicans into office in 2012.

CATHERINE RAMPELL

CATHERINE RAMPELL

Dollars to doughnuts.

I’m no political scientist, but that sounds a little too Machiavellian even for the most hardhearted of politicians.

But more important, I’m also reluctant to believe this conspiracy theory because the conspiracy isn’t necessary. That is, the economy is likely to be in bad shape in November 2012 no matter what happens with the debt talks.

As of January, the Congressional Budget Office projected that unemployment in the fourth quarter of 2012 would be 8.2 percent. Macroeconomic Advisers, another respected forecaster, recently published a similar outlook.

Of course, there are many outcomes to these debt negotiations that would make the economy even worse off than the current projections show. But really, there’s no need to paint the lily.

Article source: http://feeds.nytimes.com/click.phdo?i=e86944192f3b9740543b7e083b8b8fda

Still ‘Far Apart’ on Debt, 2 Sides Will Seek Broader Cuts

Though the president and Congressional leaders did not close wide gaps on the issues of spending cuts or new tax revenues, officials briefed on the talks said, they emerged with a consensus to aim for the biggest possible deal — one resulting in up to $4 trillion in savings — and a recognition of the dire consequences of not acting before Aug. 2, when the government will lose its authority to borrow.

Treasury Secretary Timothy F. Geithner gave a stark description of the upheaval he said would reverberate through financial markets and the broader American economy if the government were to go into default, these officials said. The eight lawmakers from both parties listened somberly, officials said, and pledged to avoid such an outcome.

“Everyone acknowledged that we have to get this done before the hard deadline of Aug. 2 to make sure America does not default for the first time on its obligations,” Mr. Obama said to reporters after the meeting. “And everybody acknowledged that there’s going to be pain involved politically on all sides.”

Democrats and Republicans are confronting not only tough choices about how to balance spending cuts and higher taxes, but how best to sell such a package, which would probably challenge basic philosophical tenets of each party, to their rank-and-file members.

Declaring that the meeting had been “very constructive,” Mr. Obama said that White House and Congressional staff members would negotiate through the weekend and that the leaders would reconvene at the White House on Sunday. At that point, he said, he hopes “the parties will at least know where each other’s bottom lines are” and try to conclude a deal within two weeks.

Later, top lawmakers and Congressional officials said that they thought a narrow opening existed for a far-reaching agreement, and that the next 48 hours and the Sunday meeting would prove pivotal. If an acceptable package cannot be agreed upon, they predicted a fallback plan in the range of $2 trillion or more, based on the earlier negotiations overseen by Vice President Joseph R. Biden Jr.

With the White House and the lawmakers promising not to divulge details of the talks, the specifics of an eventual deal were not yet clear. But Mr. Obama has put popular entitlement programs like Medicare and Social Security on the table, while Speaker John A. Boehner has signaled for the first time his openness to up to $1 trillion in new revenues. The money could presumably be raised through closing loopholes but would also probably require changes to the tax code that would have to be worked out later.

The prospect of cuts in health care benefits and Social Security has alarmed Democrats. On Thursday, Representative Nancy Pelosi, the House Democratic leader, said she wanted to give the president room to negotiate a broad agreement but would resist efforts to tie the deal to Social Security.

“Do not consider Social Security a piggy bank for giving tax cuts to the wealthiest people in our country,” Ms. Pelosi said to reporters on Capitol Hill after the meeting. “We are not going to balance the budget on the backs of America’s seniors, women and people with disabilities.”

Mr. Obama plans to meet privately with Ms. Pelosi on Friday, suggesting that the White House is now turning its attention to soothing Democrats after the president held a secret meeting with Mr. Boehner last Sunday. That session advanced the talks and laid the groundwork for Thursday’s session, but left some Democrats complaining that they were being excluded from the process.

“The big question everyone is asking is, ‘What are we getting?’ ” said Representative Edward J. Markey, Democrat of Massachusetts.

The White House took pains on Thursday to play down reports that Mr. Obama was open to substantial cuts in Social Security benefits as part of a deficit-reduction deal. The press secretary, Jay Carney, said that the president had vowed in his State of the Union address in January to put Social Security on a firmer footing, and that he would not place the subject off limits in negotiations to reduce the deficit.

But Mr. Carney insisted that the president had not changed his approach to Social Security, saying Mr. Obama would consider only changes to the system that “would not slash benefits.”

Article source: http://feeds.nytimes.com/click.phdo?i=74be49caf5f3ddd22232f34e0953cfdf

White House and Congress Clear Hurdle for Trade Deals

WASHINGTON — The White House struck a deal with House Republicans Tuesday to reinstate benefits for workers who lose jobs to foreign competition, addressing a major obstacle to consideration of three free trade agreements with South Korea, Colombia and Panama.

Haggling over the modest and obscure benefits program had tied up the trade pacts for months, pitting Democrats concerned about the impact of competition on American workers against Republicans eager to boost foreign trade but loath to increase federal spending on another aid program.

But the deal does not assure that Congress will pass the pacts, which are major ingredients in the Obama administration’s recipe for reinvigorating economic growth. Indeed, Republicans quickly said they would continue to insist that the benefits program should be considered separately from the trade agreements, a condition Democrats describe as unacceptable.

The Obama administration, which had maintained for weeks that it would not submit the trade pacts to Congress until the deadlock was resolved, by Tuesday night found itself defending its new deal as an important step that might lead to a complete resolution.

“As a result of extensive negotiations, we now have an agreement on the underlying terms for a meaningful renewal of a strengthened” benefits program, the White House spokesman, Jay Carney, said in a statement. Other administration officials hastened to clarify that that deal did not extent to the question of how that agreement might be approved.

Senator Max Baucus, the Democratic chairman of the Finance Committee, said that he would convene a hearing Thursday morning, launching a process that could end with the bills passing into law before the end of summer.

“We think this package can get the support needed to become law,” Mr. Baucus said. “American workers and our economy can’t afford for us to wait any longer to move forward.”

Senate Republicans, however, said they would seek to strip the benefits program from the legislation by asking the Senate Parliamentarian to rule that its inclusion does not comply with Senate rules, because it is not sufficiently related to the main subject of the legislation. Such a ruling would effectively kill the bill.

Senator Orrin Hatch, the ranking Republican on the Finance Committee, said that the White House’s strategy “risks support for this critical job-creating trade pact in the name of a welfare program of questionable benefit at a time when our nation is broke.”

Article source: http://feeds.nytimes.com/click.phdo?i=a16b39b984cb1e50babe7b00a622f74e