Imagine if football games were played with no referees. At first, this might sound appealing. After all, nobody likes penalties or the long waits while plays are reviewed. But without any effort to enforce the rules of the game, gridiron contests would quickly devolve into chaos.
Unfortunately, that’s the situation we face when it comes to trade with the People’s Republic of China. Only this isn’t a game; our local businesses and livelihoods are at stake. Here’s one example.
Custom Aluminum Products is a family-owned and -operated manufacturer of aluminum products based in the northwest Chicago suburbs of South Elgin and Genoa. Over its 64-year history, Custom Aluminum grew from a small storm-door and window manufacturer to a recognized leader in the aluminum extrusion industry, which involves complicated manufacturing and design processes to create specialized aluminum products. These are used in applications from infrastructure and transportation to defense systems such as submarines, airframes and communications.
Today, Custom Aluminum operates in 800,000 square feet of manufacturing space and employs hundreds of people. It provides on-site educational classes for its workers and partners with local high schools and colleges to prepare their students with the skills they’ll need to pursue careers in the aluminum industry.
Unfortunately, Custom Aluminum is under attack from predatory foreign competitors that dump aluminum extrusion products into the U.S. market at unfairly low rates. The worst offender is China, whose state-owned companies dump their goods at prices more than three times less than fair market value. This unfair competition has had damaging consequences, with Custom Aluminum forced to reduce operations and lay off workers in the last year.
This past March, the U.S. Department of Commerce found that China and several other governments were unfairly subsidizing their aluminum extrusion industries. The federal government has now enacted antidumping duties on these countries, which will play a critical role in ensuring that Custom Aluminum and other U.S. manufacturers in the aluminum extrusion sector can compete on a level playing field.
With protective duties now in place, however, China-backed firms appear to be turning to another unfair and illegal tactic: shipping their goods to the United States through other countries, fraudulently claiming the goods are made in those countries rather than in China to avoid paying higher import rates. This practice, which is known as transshipment, has been used by Chinese companies to evade U.S. trade restrictions on products ranging from steel to auto parts, honey and textiles outlawed under the Uyghur Forced Labor Prevention Act.
Civil remedies exist to protect against this tactic, including Enforce and Protect Act claims that allow U.S. Customs and Border Protection to investigate whether companies have evaded antidumping duties. But transshipment is not always caught. When it is, predatory firms often are undeterred and simply set up shell companies to ship their products by other names through other countries. Meanwhile, American companies continue to suffer the harmful consequences of unfair competition.
To strengthen deterrence against transshipment and other trade-related crimes, I recently introduced the Protecting American Industry and Labor from International Trade Crimes Act. A bipartisan effort with strong support in both chambers of Congress, the bill authorizes $20 million to establish a new unit at the U.S. Department of Justice dedicated to criminally prosecuting transshipment, customs evasion, trade fraud and other trade-related crimes.
For too long, foreign predators and fraudsters have avoided criminal liability for their violations of U.S. trade law. With the new unit and resources provided by our bill in place, companies based in China and elsewhere will face a new set of aggressive referees. Those that continue their illegal trade practices will risk criminal prosecution, hefty fines and even jail time.
We must send an unmistakable message that we will fully resource our criminal and civil enforcement to defend American jobs and businesses from unfair and illegal trade practices. It’s time to throw the penalty flag at those who refuse to play by the rules.
Raja Krishnamoorthi, a Democrat from Schaumburg, is ranking member of the House Select Committee on the Strategic Competition Between the United States and the Chinese Communist Party.
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