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China Currency Bill Goes Beyond Empty Bush Promises |
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Last year, the Republican-led Congress followed the lead of the Bush administration and did little to fight back against China’s economic repression of its workers and its unfair trade practices. But this year, that could change. A new Congress led by Democrats, who made trade a key issue in the 2006 elections, is taking a closer look at trade policies and is poised to act to level the global economic playing field.
AFL-CIO Secretary-Treasurer Richard Trumka says one of the first steps Congress should take in getting the nation’s policy on China moving in the right direction is to pass the Fair Currency Act (H.R. 782), which Reps. Tim Ryan (D-Ohio) and Duncan Hunter (R-Calif.) recently re-introduced along with more than 60 co-sponsors.
The AFL-CIO, U.S. manufacturers and many economic experts maintain that China deliberately undervalues its currency, the yuan, to keep the value artificially low so it can export products at artificially low prices—running up the U.S. trade deficit and costing good U.S. jobs. 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.
An Economic Policy Institute (EPI) policy memo shows China’s currency manipulation has enabled that country to dramatically increase its exports to the United States in the past nine years and has reduced the market share of U.S. manufacturers, which in response either laid off workers, closed down or moved offshore.
For example, between 1997 and 2004, China’s share of the U.S. market rose from 16.7 percent to 24.7 percent in apparel and increased 14.9 percent in computers/electronics and 8.2 percent in electrical equipment.
EPI economist Josh Bivens, co-author of the policy memo, says:
Our research shows China violated all established currency manipulation standards. China’s currency policy is a primary impediment to resolving economic imbalances that threaten the global economy.
If passed, the Fair Currency Act would give the U.S. government new tools to address currency manipulation and would brand such manipulation as an illegal subsidy under World Trade Organization (WTO) rules. Trumka says about China’s currency manipulation:
It is a major contributing factor to a trade deficit with China that in 2006 grew more than 15 percent to $233 billion. China now accounts for a shocking 28 percent of a record trade deficit of nearly three quarters of a trillion dollars ($764 billion). Yet this administration has absolutely refused to move aggressively on this issue.
Instead of acting, Trumka says, the Bush administration’s U.S. Trade Representative (USTR) four times in 2004 and 2005 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 currency petition was rejected in less than two hours in September 2004 without it ever being read. Members of Congress refiled the petiton twice in the six months that followed. Both were rejected. The last petition was rejected in June 2005.
At the time, then-U.S. Treasury Secretary John Snow said the administration had a better plan to attack China’s repressive actions. But, as Trumka says:
a procession of Treasury secretaries, under secretaries, deputy secretaries and the USTR have given speeches, issued press statements and testified before Congress. They acknowledge the problem but claim they have a better way. It has been talk and more talk without any leverage.
It adds up to…so many promises, so few results. The Bush administration has refused to hold the Chinese government to its international obligations on trade, currency manipulation and human rights, and has denied American businesses import relief they are entitled to under the law.
A similar fair currency bill is expected to be introduced in the Senate within weeks. In a letter to members of the House, AFL-CIO Legislation Director William Samuel said:
It is time to level the currency playing field and take an effective stand against other nations’ illegal practices.
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