China Currency Bill: ‘Major Step’ Forward   by James Parks, Mar 16, 2010

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Bipartisan legislation to address “egregious and ongoing” currency manipulation by China and other nations is a major step in the fight for good jobs and fair trade, AFL-CIO President Richard Trumka said.

The Currency Exchange Rate Oversight Reform Act of 2010 was introduced today by Democratic Sens. Charles Schumer (N.Y.) Debbie Stabenow (Mich.) and Republican Sens. Lindsey Graham (S.C.) and Olympia Snowe (Maine), with 10 other co-sponsors. In a statement, Trumka said: 

At a time when America’s working families need good jobs now, the illegal undervaluation of currency, by China and other governments, has spelled the loss of millions of American manufacturing jobs.

The U.S. Treasury Department for years has refused to cite China’s government for currency manipulation, which would set off a process by which the administration can impose trade penalties. The legislation would bring the Treasury definitions more in line with International Monetary Fund guidelines, making it easier to determine currency manipulation. The bill also provides meaningful sanctions, including countervailing duties or tariffs, if currency negotiations fail.

While this is a good first step, Trumka said the AFL-CIO is looking forward to working with Congress to strengthen the bill.

Over the past decade, China has consistently undervalued its currency by an estimated 35 percent to 40 percent. As a result, while Chinese imports and U.S. trade deficits set records, American manufacturing employment has plummeted. In 2009 alone, the U.S. merchandise deficit with China was $227 billion.

C. Fred Bergsten, director of the conservative Peterson Institute for International Economics, has estimated that China’s currency manipulation has cost between 1.5 million and 3 million good American manufacturing jobs.

If there is going to be a serious jobs program, the exchange rate of the dollar must be at the center of the debate. 

The legislation is part of a growing movement to counteract the impact of the deliberate undervaluing of China’s currency on the U.S. economy. Yesterday, more than 130 members of Congress signed on to a letter from Reps. Mike Michaud (D-Maine) and Tim Ryan (D-Ohio) that urges Treasury Secretary Timothy Geithner and Commerce Secretary Gary Locke to take strong action up to and including countervailing duties (CVD) or tariffs because of currency manipulation.  

Trumka said President Obama recognizes that we must address currency manipulation in a concrete and effective way. 

Until we do, a full economic recovery will remain out of reach. To rebuild our middle class, revitalize manufacturing and reach our goal of significantly increasing net exports, we have to take decisive action. And the time for action is now.

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