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Time for Congress to Act on China’s Economic Repression |
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The Bush administration’s failure to aggressively act to stop China’s systematic repression of workers’ rights and human rights, currency manipulation and export subsidies has led to record trade deficits and the loss of thousands of jobs in the United States. Now it’s time for Congress to do something to protect U.S. workers from the impact of China’s policies.
Testifying before the Senate Committee on Banking, Housing and Urban Affairs this week, AFL-CIO Secretary-Treasurer Richard Trumka said:
Every year, I or one of my colleagues is invited to testify on these important economic issues. Every year, the trade deficit worsens, more jobs are lost and the economic pressures on workers and the middle class continue to grow. And every year, someone from the administration responds with pledges of increased dialogue and cooperation.
The AFL-CIO, U.S. manufacturers and many experts maintain that China deliberately undervalues its currency, the yuan, to keep its value artificially low so it can export products at an artificially low price—running up the U.S. trade deficit and costing good American jobs.
The 109th Congress did not act on a bill introduced by Reps. Tim Ryan (D-Ohio) and Duncan Hunter (R-Calif.), which would have given the government new tools to address currency manipulation and would clarify that such manipulation is an illegal subsidy under World Trade Organization (WTO) rules. The Bush administration’s U.S. Trade Representative also rejected a petition by the AFL-CIO and business and farm leaders that asked the president to take action to curb China’s currency manipulation.
The first step in getting the nation’s policy on China moving in the right direction, Trumka said, would be for this Congress to immediately consider and pass the Fair Currency Act (H.R. 782), which Hunter and Ryan reintroduced Jan. 31.
An AFL-CIO report shows China’s fixed currency rate artificially lowers the price of its goods by 40 percent and subsidizes exports, putting U.S. companies at a disadvantage. The lack of currency flexibility has been a major factor in U.S. job losses and a trade deficit with China that experts predict will exceed $230 billion this year.
Yet, Treasury Secretary Henry Paulson, who has traveled several times in the past few months to China without gaining a single meaningful concession in China’s economic or human rights policies, testified before the Senate committee that China is not manipulating its currency. Paulson’s testimony prompted this response from Trumka:
Either there is something wrong with the criteria Treasury is using to determine currency manipulation, or there is something wrong with the Treasury Department’s math.
I would like to ask Secretary Paulson and his staff exactly what it would take for Treasury to find that a country had in fact manipulated its currency, and–perhaps more important–what it would take to move beyond yet another round of endless diplomacy and strategic dialogue to concrete action and results.
While the administration dawdles, American workers are hurting, Trumka says.
The fact is, domestic manufacturers and their workers are forced to compete with a currency that experts estimate is undervalued by as much as 40 percent. As one manufacturer told the U.S.-China Commission, “It’s like being in a 100-yard race, except the other team gets to start at the 40-yard line.”
Because the administration won’t act, the new Congress must take steps, Trumka told the committee.
Meanwhile, Thea Lee, the AFL-CIO’s policy director, this week told the U.S.-China Economic and Security Review Commission (a bipartisan, congressionally appointed commission):
The AFL-CIO, like the rest of the global labor movement, would like to see China become more prosperous, stable, and fair–but that can’t happen if it continues on its current path of repression, dictatorship and unfair trade practices. We need our own government to get its priorities straight with respect to China.
The commission’s 2006 annual report provides evidence that China has been seriously inconsistent in meeting its obligations as a member of the WTO. The report backs up conclusions in a report card issued by the AFL-CIO on China and a Solidarity Center study on workers’ rights.
Those reports found egregious violations of workers’ human rights in China, with weak enforcement of wage, overtime, environmental and safety and health laws. Oppressing Chinese workers is the functional equivalent of subsidizing employers at the expense of the workers. In failing to address the systematic abuse of its workers, the Chinese government contributes to the loss of U.S. jobs.
Corporations like Wal-Mart rack up billions of dollars in profits by taking advantage of the artificially low wages made possible by the Chinese government’s repression of democracy, political dissent and fundamental human and worker rights.
But that’s just the beginning of what needs to be done.
Violation of workers’ rights is just as much an economic issue as currency manipulation, violation of intellectual property rights or illegal subsidies, Lee said.
In 2004 and in 2006, with bipartisan support from then Rep. Ben Cardin (D-Md.) and Rep. Christopher Smith (R-N.J.), the AFL-CIO filed a petition alleging that the Chinese government’s brutal and systematic repression of its workers’ fundamental human rights constitutes an unfair trade practice under U.S. law. The Bush administration rejected both worker rights petitions without the courtesy of a substantive reply.
The AFL-CIO calculated the impact of the Chinese government’s repression and estimated that it contributes to the loss of hundreds of thousands of U.S. jobs in addition to the suffering inflicted on Chinese workers.
Lee told the commission that a first and obvious step to redirect our relationship with China would be for the administration to accept both the worker rights petition and the currency manipulation petition.
Accepting the petitions simply commits the administration to investigating the claims and, if warranted, to take appropriate action through the WTO. More important, it signals the Chinese government that real economic consequences will ensue if acceptable progress is not made toward complying with international obligations to respect workers’ rights and a substantial revaluation of the yuan does not take place.
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