On November 20, 2014, the U.S.-China Economic and Security Review Commission (USCC), charged with monitoring and providing recommendations to Congress regarding the national security implications of U.S.-Sino trade and economic relations, issued its annual report to Congress. In the 600-page report, the USCC addresses in detail U.S. trade remedies, inbound and outbound foreign direct investment, China’s currency manipulation, China’s health care industry, market access for U.S. medical goods and services, and U.S.-China clean energy cooperation, before reaching the following recommendations to Congress:
U.S.-China Bilateral Trade and Economic Challenges
- Require the Treasury Department to include in its semiannual report to Congress specific information on the beneficial economic impact of China moving to a freely floating currency in terms of U.S. exports, economic growth, and job creation. In addition, Congress should urge the Administration to begin immediate consultations at the G-7 to identify a multilateral approach to addressing China’s currency manipulation.
- Require the Commerce Department to prepare a comprehensive analysis of excess production capacity in China across a range of sectors, including, but not limited to, steel, glass, paper, cement and solar products, and provide a report to the President and Congress on what actions should be taken to address this problem.
- Consider amending existing trade enforcement rules to ensure that foreign investment in the United States cannot be used to impede the ability of domestic producers to bring petitions for trade remedies.
- Consider creating a private right of action allowing U.S. companies to take legal action against competitors directly in trade remedy cases, rather than having to rely on U.S. government assistance.
- Consider legislation that would make available a remedy to domestic firms that have been injured from the anti-competitive actions (such as access to low-cost or no-cost capital) of foreign state-owned companies for the injury that been inflicted and allow for the potential award of treble damages.
- Review whether existing Administration data collection regarding investments by Chinese entities in the United States is adequate information for U.S. policy makers to assess changing trends and the potential economic implications from these investments.
- Request that the U.S. trade agencies report to Congress on the extent to which existing authorities would allow for sanctions to be imposed against entities that benefit from trade secrets or other information obtained through cyber intrusions or other illegal means and were provided by a national government, foreign intelligence service, or other entity utilizing such means.
- Require the Office of the U.S. Trade Representative (USTR) to brief Congress on trade enforcement issues involving China which have been initiated or announced since 2009, but have not yet been resolved.
- Seek clarification from the Administration as to its interpretation of Article 15 of China’s World Trade Organization Accession Protocol concerning China’s graduation to “market economy” status in 2016.
- Examine whether providing the Interagency Trade Enforcement Center (ITEC) statutory authority would enhance its enforcement activities.
- Direct the Government Accountability Office (GAO) to update its report on the effectiveness of bilateral U.S.-China negotiations.
China’s Healthcare Industry, Drug Safety, and Market Access for U.S. Medical Goods and Services
- Adopt measures to make greater use of “track and trace” technology, by urging U.S. negotiators to demand that China harmonize with internationally recognized standards for medical devices and active pharmaceutical ingredients (API) and making the use of serial numbers mandatory at all times (not only when a product is suspect, as currently the law).
- Direct USTR to review the interest of U.S. healthcare goods and services providers in the Chinese market, Chinese market barriers, and opportunities to promote human health in China in ways that promote U.S. consumer and business interests.
- Urge the Institutes of Medicine of the National Academies to convene a task force to assess purchasing decisions by U.S. wholesalers, retailers, and healthcare providers with regard to China-origin drugs and drug ingredients, and to recommend ways in which to improve information sharing and coordination with the Food and Drug Administration (FDA).
- Urge FDA to insist on expedited approvals from the Chinese government for work visas for the FDA staff, and on expanded authority to conduct unannounced visits at drug manufacturing facilities in China.
- Monitor the efficacy of the FDA’s regulatory activities in China, consider ways to optimize the use of appropriate funding, and identify what other steps are necessary to protect the health and safety of the U.S. population.
- Pursue measures to improve the government’s information about drug ingredient and dietary supplement producers, especially for imports. Urge the FDA to work with its Chinese counterparts to establish a more comprehensive regulatory regime for registering China-based API producers, and make this producer information available on demand for U.S. agencies.
U.S.-China Clean Energy Cooperation
- Require the Energy Department, in consultation with the Commerce Department, to identify barriers to market access in China for clean and renewable energy products and services and their impact on U.S. production and job creation.
- Direct GAO to conduct an assessment of U.S.-China collaborative initiatives on clean energy, including whether: (a) the intellectual property rights of U.S. researchers and companies are being protected; (b) Chinese state-owned enterprises are benefitting from U.S. taxpayer-funded research; and (c) any U.S. companies, universities and labs participating in government-led collaboration have been subject to cyber penetrations originating in China.
As trade becomes a common area of interest between the Administration and the new Congress, these recommendations may play a significant role in related policy debates in 2015.