Currency Reform Bill Could Help Create New Jobs

by James Parks, May 13, 2009

Unfair currency manipulation in the global economy is costing millions of American manufacturing jobs—and a coalition of labor, business and agriculture leaders say the Currency Reform for Fair Trade Act (CRFTA) is the best vehicle to stop the wholesale destruction of our manufacturing base.

At a Capitol Hill press conference today, members of the Fair Currency Coalition endorsed the bipartisan legislation introduced by Reps. Tim Ryan (D-Ohio) and Tim Murphy (R-Pa.) and Sens. Jim Bunning (R-Ky.) and Debbie Stabenow (D-Mich.). The bill would treat prolonged currency manipulation as an illegal subsidy and dumping under U.S. trade laws.

In a statement, AFL-CIO Secretary-Treasurer and Fair Currency Coalition Co-Chair Richard Trumka says job creation is the number one issue on the minds of the federation’s members.

While enacting the stimulus has provided critical short-term relief, the United States will not see sustained employment growth until our government stops China, Japan and others from using their undervalued currency to steal American jobs. That’s why Congress must pass the Ryan-Murphy CRFTA as quickly as possible.

Specifically, the CRFTA would:

• Neutralize the negative effects of misaligned foreign currency by allowing injured American industries and their workers to seek remedies under current trade laws;
• Use publicly available data and methods to determine the misalignment in a transparent way;
• Apply a fair and predictable standard for currency misalignment; and
• Create an incentive for foreign governments to cease their unfair mercantilist trade practices and provide a deterrent against similar abuses in the future.

The AFL-CIO, U.S. manufacturers and many economic experts have argued that several of our trading partners, including China, intervene in currency markets to keep the value artificially low so they can boost exports and discourage imports—running up the U.S. trade deficit and costing good American jobs.

For example, 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, putting U.S. companies at a competitive disadvantage and creating a record trade deficit. 

Machinists (IAM) President Tom Buffenbarger told the press conference the nation is “literally losing its manufacturing base as I speak,” taking away the “dreams of our middle class and any hope for our nation’s economic recovery.”

Americans have become long on despair and short on dreams, in part due to the misalignment of currencies. For far too long, our government has sought alternatives to address this problem. None of them have worked. We urgently need to adopt a more forceful strategy reflected by this bill.

Charles Blum, executive director of the Fair Currency Coalition, said the CRFTA is based on international trade rules and is not protectionist, but an antidote to protectionism.   

It is not a threat to economic recovery here or abroad, but a necessary contribution to it.  It focuses on no particular country, but establishes a rule to be applied equally to all countries at all times.

“All U.S. industry asks for is a level playing field,” said Fair Currency Coalition Co-Chair Doug Bartlett.

If we cannot compete, shame on us. But shame on the U.S. government when they force U.S. industry to start off at a 30 to 40 percent price disadvantage because of a foreign government’s monetary manipulation. This is anti-free enterprise, anti-free trade and anti-American.

Bartlett’s company, Bartlett Manufacturing in Cary, Ill., recently was forced to lay off  50 employees and merge with another company due to unfair competition from illegally subsidized imports. He adds:

Even the most competitive of us is not strong enough to compete with a self-replenishing national slush fund.

In a letter to their House colleagues, Reps. Ryan and Murphy summed up the issue this way:

Foreign countries engage in illegal currency misalignment when they effectively prevent market forces from determining the value of their currency.  This practice allows those foreign countries artificially to make their exports cheaper and their imports more expensive in terms of their own currency, thereby putting American goods and services at an unfair competitive disadvantage in all markets. This…policy not only subverts real free trade but also adds to the massive imbalances that threaten the global system. It must be ended.

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