By Doug Palmer

WASHINGTON (Reuters) - The United States on
Thursday announced plans to toughen rules against what it sees
as unfair foreign trade practices, proposing a number of
changes likely to irk China, its biggest import supplier.

At least some of the proposals could lead to higher
anti-dumping or countervailing duties on goods from the Asian
manufacturing giant, the most frequent target of U.S.
complaints about unfair trade in recent years.

But the plan seeks to strengthen the effectiveness of U.S.
trade protection measures "across a range of areas," a senior
Commerce Department official told Reuters.

With President Barack Obama's popularity falling and
Democrats in danger of losing control of Congress in November
elections, the party has been pushing a "Make it in America"
agenda aimed at creating U.S. manufacturing jobs.

"Today's announcement is another demonstration of
our continuing efforts to sharpen our trade enforcement tools,"
U.S. Commerce Secretary Gary Locke said in a statement.

It outlined 14 proposals that increase penalties or toughen
requirements on foreign companies that sell goods the United
States deems unfairly priced or subsidized.

Although less than 3 percent of imports into the United
States are hit with anti-dumping or countervailing duties, the
trade laws can be an important source of protection for sectors
such as steel, tires, paper and other industrial goods.

INVESTIGATIONS JUMP

The number of U.S. investigations jumped to 34 in 2009, an
increase of 79 percent from 2008. New cases have tapered off
this year, although important decisions against China are
pending in probes involving paper and aluminum products.

The department will issue specific proposals in coming
months for public comment, but says it does not need
legislation to make any of the proposed changes.

One trade attorney, who asked not to be identified, said at
first glance all the initiatives appeared aimed at creating
"higher, more certain and longer-lasting duties."

Conspicuously missing was a decision on whether to
investigate China's exchange rate practices as an unfair
foreign subsidy, a diplomatically explosive issue before the
department in the paper and aluminum cases.

Many lawmakers, manufacturers and economists say China's
currency is undervalued, giving it an unfair price advantage in
global markets. The department has been mulling for months
whether it has a strong legal footing to investigate the
charge.

China accounted for 19 percent of U.S. goods imports in
2009 for a total of $296.4 billion. Next on the list was Canada
with $224.9 billion, followed by Mexico, Japan, Germany,
Britain, South Korea, France, Taiwan and Venezuela.

Department officials said tightening the anti-dumping and
countervailing duties rules would help meet Obama's goal of
doubling U.S. exports in five years by putting domestic firms
that receive protection in a stronger position to compete.

But Lewis Leibowitz, a trade attorney with Hogan Lovells,
said that connection is unclear since higher import duties
could boost costs for many U.S. manufacturers.

PROPOSALS TARGET CHINA

Department officials spotlighted three proposals they
believed would have the most impact, and said many of the ideas
are intended to tighten procedures for investigations involving
"non-market economies" like China.

One would require importers to pay a cash deposit to cover
preliminary duties once they are announced.

Currently, importers have the option of posting bonds at a
fraction of their liability for the five or six months until
final duties are set.

That has led to problems collecting the full amount the
government is owed, department officials said.

"We think this is a way to better ensure that companies
that ... may ultimately be liable for a dumping duty actually
have the wherewithal to pay," a department official said.

A second proposed change would allow the department to
subtract Chinese export taxes when calculating the size of
anti-dumping or countervailing duties.

That is common practice now for unfairly traded goods from
"market economies" like Japan and countries in Europe. But it
has not been the case for non-market economies like China on
the theory the taxes are too hard to measure.

China will "undoubtedly" be upset by the proposal because
it could lead to higher duties on its goods, the Commerce
Department official said.

In a similar vein, the department also wants to make it
harder for exporters in non-market economies to win more
favorable "separate rates" by insisting on stronger proof the
companies are independent of government control.

A third major proposal would stop the practice of removing
individual foreign companies from anti-dumping orders if they
can show during three annual administrative reviews they
haven't dumped products in the United States.

Such companies could still receive a zero duty rate under
the new proposal. But they would remain subject to the order,
keeping them on notice their duty could be increased if
Commerce finds new evidence of unfair trading.

Department officials also want to reduce the potential for
fraud by toughening "certification requirements" and making
attorneys and other company representatives more accountable
for the accuracy of information they submit.

China, the European Union and others are expected to
closely scrutinize the proposals, although the U.S. officials
insist they are within the bounds of World Trade Organization
rules and in some cases match what others already do.
(Reporting by Doug Palmer; Editing by Vicki Allen and Jerry
Norton)