By Doug Palmer  |  December 5, 2007

WASHINGTON (Reuters) – The U.S. Congress and Chinese policymakers should think carefully before taking action that could damage the U.S.-China trade relationship, U.S. Trade Representative Susan Schwab said on Wednesday.

Although China has become the “chief target” in the United States for concerns about globalization, both countries benefit from a deepening trade and economic relationship, Schwab argued in a speech to the Independent Women’s Forum.

“Both countries, in their own ways, must steer clear of economic retrenchment,” Schwab said, just a few days before heading to Beijing with other senior Bush administration officials for high-level economic talks.

She expressed concern about several bills in Congress aimed at addressing concerns about China’s trade and currency policies, as well as the safety of Chinese goods.

“They are crude tools for a complex task. They focus on the wrong issues and are likely to do nothing to help, and — even worse — could hurt American workers, farmers and entrepreneurs,” Schwab said.

Even so, there are signs China is “slowing or even backsliding” on economic reforms in ways that could harm U.S. companies trying to compete in that market, Schwab said.

“Recent actions by the Chinese government, taken together, provide reason to worry that China will use its regulatory and other policies to develop so-called national champions and tilt the playing field against foreign competitors,” she said.


Schwab and U.S. Commerce Secretary Carlos Gutierrez are the U.S. co-chairs of the U.S.-China Joint Commission on Commerce and Trade (JCCT), which is meeting next Tuesday in Beijing.

A second bilateral forum, led for the United States by Treasury Secretary Henry Paulson, meeting next week focuses on longer-term issues in the trade and economic relationship.

The United States is pressing China in the JCCT for action on a long list of market access concerns, including its long-standing ban on imports of U.S. beef, Schwab said.

At the last JCCT meeting in April 2006, the United States trumpeted a Chinese commitment to “reopen the Chinese market to U.S. beef” once final technical issues were resolved.

However, the market remains closed.

The U.S. government said another important achievement of 2006 meeting was a Chinese government decision to improve transparency by publishing all its laws, and regulations affecting trade and control of foreign exchange in a single journal.

But Schwab said in her speech China’s opaque rulemaking procedures and commitment to rule of law remained a concern.

She urged Beijing to “establish a mandatory process for public notice and comment on proposed rules and regulations.”

Schwab acknowledged the United States would be revisiting some issues next week previously thought to be resolved.

“We’ll keep going until we get them done,” she said, adding that the United States could possibly take legal action under U.S. and global trade laws if dialogue fails.

(Editing by Eric Walsh)