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Commerce Flubs Currency Decision, Now It’s Up to Congress
The AFL-CIO is disappointed the U.S. Department of Commerce today rejected arguments that China’s undervalued currency acts as an export subsidy.
We agree with Alliance for American Manufacturing (AAM) Executive Director Scott Paul, who said in a statement:
It’s now up to Congress to pass legislation to strengthen and modernize our trade laws so that the devastating impact of currency manipulation can be factored into penalties for subsidies and dumping. Our workers and businesses were promised a level playing field. Unless the mercantilist policies of China and other nations are challenged at every level, we will continue to pile up trade deficits and job losses.
The Economic Policy Institute (EPI) estimates that China’s currency manipulation and the trade deficit it creates cost 2.4 million U.S. jobs between 2001 and 2008. Congress is expected to vote as early as next week on two bills, H.R. 2378 in the House and S. 3134 in the Senate, that would give the government broader powers to act against China’s currency manipulation. The House Ways and Means Committee also has scheduled a major hearing on China’s currency on Sept. 15.
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2 Comments
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This issue has to be handled more carefully. While clearly the U.S.-China trade has been a motor of de-industrialization in the U.S. (and industrialization in China), portraying this process as a Chinese policy is potentially extremely dangerous.
First of all, the imbalance in U.S.-China trade is the result of collusion between the Chinese government, U.S. finance, and Multi-National Corporations. To ignore this- or pretend it is otherwise- not only makes protests ineffective, it paves the way for international aggression.
History tells us that industrial crises often give way to international war. The possibility of a war between China and the U.S. is a real possibility which would be devastating in consequence to U.S. workers. It is imperative that we are honest about the situation now if we want a peaceful future.
Ever since Clinton let China have what used to be called “Most Favored Nation” trade status, Presidents have been complaining about China’s undervalued currency, the yuan or renimbi. What gets lost in the discussion is that we can unilaterally increase the value of the yuan. China currently sets the yuan at about 6.5 per $1, buying and (mostly) selling yuan to maintain that value. Say we started buying yuan at 6 per $1? The excahnge rate would then be 6:1. If we were to buy yuan at 5 per $1, the exchange rate would be 5:1, or any other level we chose.