Industry News

China PNTR Removal Recommendation

Nov. 29, 2022
By: Chaney A. Finn

The U.S.-China Economic and Security Review Commission was created by Congress in October 2000 with the legislative mandate to monitor, investigate, and submit to Congress an annual report on the national security implications of the bilateral trade and economic relationship between the United States and the People’s Republic of China. The scope of the annual report includes providing recommendations to Congress for legislative and administrative action.

In the Commission’s 2022 annual report, it is recommended that China be suspended from Permanent Normal Trade Relations treatment for non-compliance with its World Trade Organization accession provisions, or in other words, for its allegedly predatory and distortive trade practices within the region and globally. Removal from the PNTR would result in some of the highest tariffs and trade barriers into the U.S. market and would align with recent policies the U.S. has taken to isolate China from the U.S. economy, including Section 301 tariffs and the Uyghur Forced Labor Prevention Act (UFLPA). In the report, the Commission states, "There remains a gap between America’s growing recognition of the challenges China presents and our responses to date in dealing with them."

Support for the hardline recommendations is evident. In response to the recommendations, Alliance for American Manufacturing President, Scott Paul stated, “The recommendations released today from the U.S.-China Economic and Security Review Commission will build on these initial steps, and we believe policymakers in Congress and the Biden administration should take heed. 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.”

The apparent objective of the Commission’s recommendations is to reduce dependance on China by imposing increased tariffs and trade barriers, incentivizing supply chains to relocate outside of China. The revocation of China from the PNTR is among other China-dependency reducing recommendations from the report which also include Congress using the Domestic Production Act to re-shore the U.S. production of pharmaceutical goods that depend on active ingredients from China and establishing a new Economic and Security Preparedness and Resilience Office in the Executive Branch to monitor critical supply chains.

Establishing the Economic and Security Preparedness and Resilience Office within the executive branch would grant the President the authority 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. These responsibilities are currently under the Commerce Department's supply chain resiliency efforts.

Do not hesitate to contact any attorney at Barnes, Richardson & Colburn, LLP for questions about supply chains in China, forced labor issues, complying with the UFLPA, or any other import or export question.