Obama Budget Seeks Funding for Trade as China’s Xi Arrives

China's Vice President Xi Jinping
Xi Jinping, China's vice president. Photographer: Nelson Ching/Bloomberg

President Barack Obama asked Congress for $26 million and at least 50 people for a new U.S. panel to investigate unfair trade practices by nations including China, whose Vice President Xi Jinping arrives today for a U.S. visit.

The 2013 budget proposal Obama submitted to Congress today contains funds for an Interagency Trade Enforcement Center that would monitor and enforce trade agreements and laws, Gene Sperling, director of the National Economic Council, told reporters. Obama announced his intention to create the panel, which includes lawyers, researchers, analysts and agents supported by the Commerce Department and U.S. Trade Representative, in his Jan. 24 State of the Union speech.

“This is designed to significantly increase our capacity to bring additional trade cases that will level the playing field against countries around the world, including China,” Sperling said.

Double Exports

Obama in his budget also is seeking an additional $13 million for Customs and Border Protection efforts to target pirated goods, $10 million to post 16 Food and Drug Administration employees in China and three U.S.-based analysts to protect against unsafe imports, according to an administration official, who asked not to be named before the budget plan was announced.

The efforts may aid Obama’s attempt to boost economic growth and cut unemployment by doubling exports to $3.14 trillion by 2015, from $1.57 trillion in 2009.

Obama is proposing a 3.4 percent increase in the Commerce Department’s 2013 budget to $8 billion. The request includes an additional $62 million for the International Trade Administration, which promotes trade, including $24 million in spending for enforcement of trade laws, Rebecca Blank, the acting deputy Commerce secretary, told reporters today in a telephone briefing.

The U.S. Trade Representative’s office, which Blank said will also help fund the new trade enforcement center, is seeking a budget increase of 3.9 percent to $53 million, $2 million more than its estimated 2012 level.

Focus on China

“There’s a widespread perception in Washington that the Chinese are not always playing by the rules,” Matthew Goodman, an Asia analyst at the Center for Strategic and International Studies in Washington, said in an interview.

Though the panel will be empowered to investigate all foreign trade, Obama cited China as a source of particular concern in his January speech to Congress. That could become a source of tension as Xi begins a five-day visit to the U.S.

Xi is in line to replace President Hu Jintao as general secretary of China’s ruling Communist Party this year.

“Both sides have an interest in seeing this visit focus more on relationship-building between the leadership of the two countries rather than trying to resolve the longstanding issues,” said Goodman, who served as Obama’s coordinator for Asia-Pacific Economic Cooperation until two months ago.

The U.S. Senate has voted to punish China for maintaining an undervalued currency as Republican presidential candidates have pledged to label China a currency manipulator.

WTO Complaints

Obama filed five World Trade Organization complaints against China since taking office three years ago, compared with the seven that George W. Bush filed from 2001, when China joined the WTO, and the end of his term in 2009. The U.S. and China have clashed over access to each others’ markets for products including steel pipes, poultry, tires, movies and music.

China’s violations of WTO rules have contributed to more than 400,000 lost jobs since 2000, according to a report released last month by the Alliance for American Manufacturers, a group that includes Pittsburgh-based United States Steel Corp.

“Too many American workers have had their jobs stolen from them by foreign unfair, predatory and illegal trade practices,” Leo Gerard, president of the United Steelworkers of America, said yesterday in a statement. Obama’s proposal “makes an important investment in trade law,” he said.

Solar-Energy Complaints

U.S. industries say the government isn’t doing enough to let companies compete with China. SolarWorld AG’s U.S. unit says the solar-energy industry is being harmed by China’s cash grants, discounts on raw materials, preferential loans and tax incentives. The U.S. is investigating the complaint.

Obama has also called on Congress to create a program to provide credit to companies competing against foreign counterparts that benefit from preferential credit from their governments.

The trade enforcement center will probably take two years to reach its full strength, according to the administration official.

China’s economic growth is driving an increase in imports from the U.S. China’s economy expanded 8.9 percent in the last three months of 2011 from the year ago period. The U.S. economy grew 1.6 percent during the same period.

U.S. goods exports to China rose 13 percent to $104 billion last year from $91.9 billion a year earlier. That topped the 9.4 percent rise in imports from China, according to the U.S. Commerce Department. That still left a trade deficit of $295 billion, $23 billion wider than a year earlier.

U.S. exports have been spurred by a stronger yuan. The currency reached an 18-year high on Feb. 10 and advanced 0.1 percent last week to 6.2986 per dollar in Shanghai, according to the China Foreign Exchange Trade System.

“While Xi Jinping brings a change in leadership for China, I am hopeful that this transition also bring changes in policy for the U.S.-China economic relationship,” Representative Dave Camp, a Michigan Republican who heads the House Ways and Means Committee, said in an e-mail. “China has been both an opportunity and an obstacle when it comes to our economy and American jobs.”

Before it's here, it's on the Bloomberg Terminal. LEARN MORE