Witnesses said the newly introduced Leveling the Playing Field Act 2.0 and other trade enforcement measures are urgently needed to combat trade cheating.
President Trump’s trade agenda has seized the media’s attention, but Congress has big plans for defending American workers from unfair trade, too. During a House Ways & Means Subcommittee on Trade hearing on Tuesday, witnesses and lawmakers called for passage of two newly introduced trade enforcement bills as well as other measures to combat trade cheating, identifying China as one of the most egregious offenders.
“Failing to address China’s economic aggression will bring enormous long-term costs in the continued offshoring of jobs and industries: the loss of our technological and military superiority and economic dependence on China,” Schagrin Associates Partner Jeffrey Gerrish warned the committee. “China’s ambitions pose an existential threat to the United States, and a comprehensive trade enforcement agenda is essential to counter that threat.”
Gerrish, who served as the Deputy United States Trade Representative (USTR) for Asia, Europe, the Middle East, and Industrial Competitiveness from 2018 to 2020, urged the Trump administration to impose additional tariffs on Chinese imports if the Office of the USTR finds that Beijing has failed to live up to its U.S.-China Phase One Trade Agreement commitments.
However, tariffs are only one of the measures that Gerrish recommends to curb China’s rampant trade cheating. He also called on Congress to revoke China’s permanent normal trade relations (PNTR) status, which privileges its trade with the United States. Alliance for American Manufacturing (AAM) President Scott Paul has advocated for this action, as has the House Select Committee on China.
“Granting PNTR to China was a colossal mistake,” Gerrish said, “and American workers and companies have paid the price for it. The time has come for that mistake to be corrected.”
In addition to this measure, Gerrish recommended that Congress strengthen U.S. anti-dumping and countervailing duties (AD/CVD) by passing the Leveling the Playing Field 2.0 Act (LTPFA), which was introduced by Sens. Todd Young (R-Ind.) and Tina Smith (D-Minn.) on Monday and has garnered AAM’s support.
LTPFA 2.0 serves as an update to the Leveling the Playing Field Act, a trade remedy law that was enacted in 2015 to address unfair competition. The update would establish “successive investigations,” making it easier for petitioners to bring new trade cases when repeat offenders move production to another country.
Wiley Rein LLP Partner Greta Peisch joined Gerrish in supporting swift passage of LTPFA 2.0 during her testimony before the House subcommittee. The bill is “the next front in combating China’s tactics of moving production from one country to another and subsidizing producers in third countries,” Peisch, who previously served as General Counsel for the Biden administration’s Office of the USTR, said.
LTPFA 2.0’s trade enforcement boost is indeed needed. As tariffs aim to squash trade cheating, bad actors have found new tricks, The Wall Street Journal reported this week:
“Chinese companies looking for ways to dodge tariffs have expanded production to places such as Vietnam, Indonesia and Thailand. Outward direct investment from China into the manufacturing industry in Asean, a bloc of Southeast Asian countries, was about $9.1 billion in 2023, up from around $4.5 billion in 2018, according to China’s Ministry of Commerce.”
Rep. Greg Murphy (R-N.C.) offered a narrative from the Tar Heel State to illustrate this interminable fight against trade.
Charlotte Pipe and Foundry, a company that has been in business since 1901, has successfully won AD/CVD cases against Chinese manufacturers. However, the North Carolina company has had to repeat this costly legal effort again and again as the same Chinese manufacturers re-route their goods through other countries to evade trade enforcement.
“Charlotte Pipe is now on its 14th Enforce and Protect Act petition. How much that each of these companies have to spend in trying to fight the unfair trade practices, primarily from China, is ridiculous,” Murphy said. “These promised remedies by AD/CVD orders remain out of reach, and the threat to domestic industry remains. Our inability to lawfully enforce anti-dumping and countervailing duties is undermining the utility of U.S. trade laws to domestic producers.”
Charlotte Pipe’s experience is far too common. In her testimony, Peisch reported that “domestic manufacturers filed over 100 anti-dumping and countervailing duty petitions with the Commerce Department and the International Trade Commission last year, nearly double the average annual petitions filed in the last 10 years.”
Peisch continued:
“Enforcement tools must continue to evolve with the trade challenges facing U.S. manufacturers, farmers, service providers, and workers. The Leveling the Playing Field 2.0 Act spearheaded by members of this subcommittee is the next front in combating China’s attempts to get around trade remedies. It will enable our industries to counter China’s tactics of moving production from one country to the another and subsidizing producers in third countries. As this example shows, if we stand still in developing our trade enforcement tools, we move backwards.”
But there are other trade tools also under consideration in Congress.
Introduced this month by Rep. Mike Bost (R-Ill.), the Fighting Trade Cheats Act would more than double the penalties currently in place for customs fraud, further strengthening U.S. trade remedy law.
Rep. Terri Sewell (D-Ala.) called both LTPFA 2.0 and the Fighting Trade Cheats Act “commonsense, concrete solutions to protect American workers and to get tough on China’s anti-market practices.”
It’s important to note that, as Congress considers how best to defend American workers, Trade Adjustment Assistance (TAA) must be part of the conversation, which Rep. Linda Sanchez (D-Calif.) highlighted in her opening remarks.
For nearly 50 years, TAA provided job training and other benefits and services to workers who suffered job loss due to offshoring or foreign competition, but the program expired in July 2022. This means that workers who lost their jobs because of trade after June 30, 2022, are not eligible to participate in the federal program.
Trade cheating has hurt American workers and communities for decades, but modern trade enforcement tools like those the House Ways & Means Trade Subcommittee considered during Tuesday’s hearing could play a significant role in fighting back.