U.S. Rejects Petition for China Sanctions
WASHINGTON — The Bush administration on Wednesday rejected a petition by organized labor to penalize China for its workplace practices and indicated that it would rebuff a request targeting Beijing’s currency policies.
Administration officials said they preferred to rely on diplomatic negotiations to pressure China to improve working conditions and adopt a flexible exchange rate that would make U.S. goods more competitive in Chinese markets.
“We’re not about petitions. We’re about results,†Commerce Secretary Don Evans said. “Promoting economic engagement, not economic isolation, is the best way to raise labor standards and living standards in China.â€
The decision appeared certain to intensify an election-year debate over the vigor of the administration’s China policy. President Bush’s critics, including Democratic challenger Sen. John F. Kerry of Massachusetts, have accused him of failing to crack down on trade, labor and currency practices that may have contributed to last year’s $124-billion trade deficit with China and the loss of 2.6 million private-sector U.S. jobs since Bush has taken office.
“This administration has once again refused to make any serious effort to use the legitimate rules that govern trade to level the playing field and prevent our businesses and workers from being taken to the cleaners,†Kerry said. “When it comes to China ... this White House is all talk and no action.â€
The administration said it was rejecting a petition filed by the AFL-CIO under Section 301 of the Trade Act of 1974, which allows the U.S. to sanction countries that have practices that restrict U.S. commerce. The petition was seeking punitive tariffs on Chinese goods in response to practices the labor organization claimed were depressing the wages of Chinese workers by as much as 86%.
The AFL-CIO petition accused China of barring independent trade unions, engaging in the “brutal repression†of worker rights and failing to enforce worker protections, such as restrictions on work hours.
Chinese Vice Premier Wu Yi, who visited Washington last week, had denounced the petition as “completely groundless†and invited labor leaders to visit Beijing to see for themselves. China’s Trade Ministry had no immediate comment after the petition’s rejection.
Administration officials signaled that they also planned to turn down a separate petition being drafted by a coalition of manufacturers, unions and farm groups requesting a formal probe and possible sanctions aimed at China’s currency practices.
China pegs the value of its yuan to the dollar at a fixed rate that many economists consider artificially low, a practice that boosts its exports by making Chinese goods and services cheaper in the U.S. and elsewhere.
The administration has been prodding China to abandon its currency peg and move toward a flexible, market-based exchange rate. Chinese officials have indicated their willingness to do so, but not right away.
In the meantime, U.S. officials said, it is better to engage in constructive consultations than to impose punitive sanctions.
“We do not need a yearlong investigation to know there are serious concerns with labor rights and working conditions in China ... [or] to know we have serious concerns with China’s policy on the value of its currency,†U.S. Trade Representative Robert B. Zoellick said. “The AFL-CIO petition and the possible petition on currency issues both seek remedies that would worsen the very problems we are trying to solve.â€
Evans said he would press Beijing to improve labor practices and adopt a flexible exchange rate during ongoing negotiations over China’s request to be designated a “market economy,†which would make it less vulnerable to U.S. trade sanctions.
Administration officials also said they were launching a joint effort to help China adopt workplace practices in compliance with standards set by the International Labor Organization.
AFL-CIO President John Sweeney called the U.S. action an “outrage and an insult†to workers in both countries.
“It shows decisively that this administration will only enforce U.S. trade laws when corporate profits and concerns are at stake, but will not go to bat to protect the fundamental human rights of workers,†Sweeney said in a statement.
Business groups praised the decision. “The AFL-CIO petition ... called for an isolationist, unilateralist U.S. trade policy that would have damaged the economic future of American workers, farmers, consumers and companies,†Business Roundtable President John J. Castellani said in a statement.
Bloomberg News was used in compiling this report.
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