US-China Commission Recommends Congress Withdraw PNTR for China

The U.S.-China Economic and Security Review Commission said that if China has not complied with its World Trade Organization accession provisions, Congress should pass a law "to immediately suspend China’s Permanent Normal Trade Relations" treatment, which would mean that Chinese imports would face higher base tariffs than from nearly all other countries. Then Congress should assess what conditions it would require to renew Chinese imports' eligibility for Most Favored Nation Tariffs, the commission said in its annual report, released Nov. 15.

Last year, the commission recommended that the administration implement a withhold release order on all products originating in Xinjiang; while the administration did not follow that recommendation, the Uyghur Forced Labor Prevention Act essentially accomplishes that goal (see 2111170058).

In this report, the authors wrote: "There remains a gap between America’s growing recognition of the challenges China presents and our responses to date in dealing with them."

Among its other top 10 recommendations, the commission also suggested that Congress grant authority to the executive branch so that "the president can require specific U.S. entities or U.S. entities operating in specific sectors to divest in a timely manner from their operations, assets, and investments in China, to be invoked in any instance where China uses or threatens imminent military force against the United States or one of its allies and partners."

It said Congress should tell the administration to create an "Economic and Security Preparedness and Resilience Office within the executive branch to oversee, coordinate, and set priorities for cross-agency efforts to ensure resilient U.S. supply chains and robust domestic capabilities, in the context of the ongoing geopolitical rivalry and possible conflict with China." Much of what it said the office would do is currently under the Commerce Department's supply chain resiliency efforts.

It said Congress should direct the FDA, "in cooperation with other federal agencies, within one year and on an ongoing basis thereafter, to identify pharmaceutical products that utilize active pharmaceutical ingredients (APIs) and other ingredients and inputs that are sourced directly or indirectly from the People’s Republic of China and develop alternative sourcing arrangements through available tools and resources, including Defense Production Act authorities."

Alliance for American Manufacturing President Scott Paul reacted to the report saying that the commission's recommendations would build on the Section 301 tariffs and export controls in recent years.

"Suspending normalized trade relations status for China should be a priority for lawmakers. Also of note are recommendations to bolster domestic supply chain resilience and monitor our dependence on pharmaceutical supplies from China.

“We believe there is bipartisan interest in strengthening domestic supply chains and demonstrating global leadership to contain China’s harmful trade and economic policies," he said.