Holding China Accountable Through the Fair Currency Act

by Mike Hall, Feb 28, 2007

It’s time for the Bush administration to hold the Chinese government accountable to its international obligations on trade, currency manipulation and human rights and provide U.S. businesses the import relief they are entitled to under the law, says AFL-CIO Secretary-Treasurer Richard L. Trumka.

Trumka spoke today at a Capitol Hill press conference to reinforce the AFL-CIO’s strong support for the Fair Currency Act of 2007 (H.R. 782) that would give the United States new tools to deal with China’s currency manipulation—a major factor in the huge trade deficit with China and the loss of U.S. jobs.

Currency manipulation is illegal and it undermines America’s industrial base. 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.

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 boost exports and discourage imports—running up the U.S. trade deficit and costing good American jobs. An AFL-CIO report shows China’s fixed currency rate artificially lowers the price of its goods by 40 percent, effectively subsidizing China’s exports and putting U.S. companies at a competitive disadvantage.

The bipartisan Fair Currency Act, introduced by Rep. Tim Ryan (D-Ohio) and Duncan Hunter (R-Calif.), would clarify that currency manipulation is an illegal subsidy under World Trade Organization (WTO) rules. In 2004 and 2005, the Bush administration rejected petitions from the AFL-CIO, business and farm leaders that asked Bush to take action against China’s currency manipulation.

The Bush administration also has rejected bipartisan calls from Congress to act, claiming it can’t pinpoint any “technical” violations of international currency rules. Says Trumka:

Over and over, they acknowledge the problem but tell us they can’t find any “technical violations” of the law. And, over and over, they promise yet another “strategic dialogue” with the Chinese government. It has been talk and more talk without any leverage.

Trumka was joined by other representatives of the labor-business group, the China Currency Coalition, and the AFL-CIO Industrial Union Council (IUC). Similar Senate legislation is expected to be introduced in the coming weeks.

To find out more about China’s currency manipulation and how it impacts trade, jobs and human rights, click here to read IUC Executive Director Robert Baugh’s 2006 testimony and here for a report from the Economic Policy Institute.

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