[Congressional Record Volume 157, Number 148 (Wednesday, October 5, 2011)]
[Senate]
[Pages S6150-S6152]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
CURRENCY EXCHANGE
The ACTING PRESIDENT pro tempore. The Senator from Rhode Island.
Mr. REED. Madam President, as a cosponsor, I rise today in strong
support of the Currency Exchange Rate Oversight Reform Act. This is a
bipartisan effort that will protect U.S. manufacturers from economic
harm caused by unfair and damaging currency manipulation.
Unemployment throughout Rhode Island and the Nation has been
persistently high and corrosive. It is caused in part by the effects of
currency manipulation, particularly China's devaluation of the yuan.
This is one of the challenges that manufacturers and hard-working
individuals in Rhode Island and across the Nation face each day.
The effects of unfair currency manipulation have caused far too much
harm for far too long. It has resulted in distorted trade balances that
hurt U.S. workers and our Nation's economy as a whole.
Confronting Chinese currency manipulation sends a very strong signal.
If implemented correctly, it will create jobs, aid our economic
recovery, and lead to the creation of an estimated 1.6 million American
jobs. Free trade only works when it is fair. China is not playing by
the rules, and U.S. workers are harmed as a result.
China is, by any measure, keeping its currency artificially weak and
engaging in trade practices that are harming the U.S. economy. By
devaluing the yuan relative to the dollar, China is essentially
subsidizing its exports and taxing U.S. imports at the expense of U.S.
companies and workers.
It has been estimated that the yuan is undervalued relative to the
dollar by as much as 40 percent, effectively subsidizing Chinese
manufacturers and spurring our $273 billion trade deficit with China.
The Economic Policy Institute has estimated that the trade deficit
with China has cost the U.S. economy 2.8 million jobs--1.9 million of
these were manufacturing jobs--between 2001 and 2010. This resulted in
approximately 12,000 jobs lost in Rhode Island.
A recent study by a team of three economists confirmed what many in
my State already know: Jobs in Rhode Island are among the most
vulnerable to cheap Chinese imports. And job losses are directly
attributable to the U.S. trade deficit with China, which has been
exacerbated by China's persistently undervalued currency.
Our trade deficit with China, which grew over 10 years from $83
billion to $273 billion, has had an outsized impact on my State because
Chinese goods compete directly with many products that were produced
and that will continue to be produced in Rhode Island. From textiles to
toys, Rhode Island has been harmed as the artificially cheap yuan and
exports from China have hollowed out industries, jobs, and communities.
If China and other Asian economies such as Singapore, Taiwan,
Malaysia, and Hong Kong let their currency float freely against the
dollar, U.S. GDP would increase by as much as $287.5 billion, that is a
1.9-percent increase, creating up to 2.25 million jobs in the United
States.
So much of our efforts are focused today, and they should be, on
growing our economy, measured not just by GDP but, more importantly, by
jobs. This bill is one of those measures that is consistent with
growing jobs in America and also respects the fact that in order for
trade to work in the world, the trade has to be fair as well as free--
that everybody has to follow the rules, and there is no exception. What
we expect of ourselves, we should demand of others. That is at the
heart of this bill.
Currently, private businesses in the United States are not able to
compete on a level playing field with Chinese manufacturers and
exporters who have an unfair advantage because the Chinese Government
is manipulating its currency. Undervaluing the yuan isn't even in the
best interest of the Chinese economy because it wastes resources and
erodes wages of Chinese workers. The benefits of an undervalued yuan
primarily flow to politically powerful Chinese companies dependent on
trade, many of which are state owned.
According to China's own national economic census, Chinese state-
owned enterprises control over 40 percent of the assets in their
industrial sector. When countries stack the deck for companies and
industries they control, it hurts businesses in the United States. This
is not free trade or fair trade. Those who hold up China's economic
growth and favorable tax conditions, as one Fortune 500 company CEO
recently did, should realize this: After all, China has little reason
to tax corporations when so many of the country's largest corporations
are state owned.
We would not dare to suggest the form of ownership or government
intervention in our economy China uses consistently and persistently as
a major way to fund their government and fund their activities. So I
think we have to recognize what is being posed in the guise of their
version of free trade.
It is not fair trade, it is not free trade, and it doesn't even help
the people of China. But it certainly helps the powerful forces of the
Chinese Government and their favored business partners.
So we have a clear choice, and we have legislation that will be
effective because it is consistent with what we do, which is follow the
rules. We are simply asking every nation to follow the rules when it
comes to currency.
The legislation before us today would level the playing field for
businesses in Rhode Island and throughout the country. It requires the
Department of Treasury to identify misaligned currencies using
objective criteria and requires the administration to take action if
countries fail to correct this misalignment.
It ensures that our trade laws can address currency undervaluation
when it harms American workers and manufacturers by offsetting the
benefit foreign producers and exporters receive from their country's
currency manipulation.
The effects of unfair currency manipulation have caused far too much
harm for far too long. It has resulted in distorted trade balances that
have hurt U.S. workers and our Nation's economy as a whole. This
legislation will strengthen the tools we have to make sure our
businesses can compete on a fair and level playing field against
foreign companies that benefit from undervalued currency.
Let me be clear that this is not a silver bullet for our economy, and
there are many other steps we have to take. As we continue to press for
solutions to revitalize our economy--with a front-and-center focus on
saving and creating jobs--addressing unfair subsidies and trade
practices must be part of this effort. So I would urge swift passage of
the Currency Exchange Rate Oversight Reform Act.
With that, I suggest the absence of a quorum.
The ACTING PRESIDENT pro tempore. The clerk will call the roll.
The legislative clerk proceeded to call the roll.
Mr. BLUMENTHAL. Madam President, I ask unanimous consent that the
order for the quorum call be rescinded.
The ACTING PRESIDENT pro tempore. Without objection, it is so
ordered.
Mr. BLUMENTHAL. Madam President, I rise as a proud cosponsor of the
Currency Exchange Rate Oversight Reform Act, S. 1619. We are all aware,
in this Chamber and around the country, that China has been
manipulating its currency flagrantly and blatantly at the expense of
our businesses in Connecticut and New York and around the country at
the expense of American workers. This measure is necessary to protect
American jobs and American workers.
Chinese currency manipulation is a job killer, very simply. At a time
when so many are desperate for work and so many Americans and citizens
of Connecticut are seeking good jobs, this
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measure will help protect American workers and save American jobs,
which is why I am proud to be a cosponsor of this measure.
I am proud to have begun this fight well before I became a Senator
and well before I even thought of becoming a Senator, when I was
attorney general of the State of Connecticut, because I heard from
Connecticut businesses about the effects of Chinese currency
manipulation in their efforts to sell their goods and services not only
in China but around the world and even in America. Undervaluing Chinese
currency puts American businesses at a disadvantage. It is a hidden
export subsidy. It is a means of underpricing Chinese goods and
services at the expense of ours. That affects not only our exports to
China, but it affects our sales of airplanes in Europe, it affects the
sales of all kinds of products--both high-tech and others--in this
country, and it deprives the United States and its businesses of a
level playing field.
The extent of that undervaluation is actually unknown, even as we
speak. It is probably in the range of 25 percent. Economists tell us it
is anywhere between 20 percent and 50 percent. The Chinese have
permitted their currency to rise slowly, perhaps about 6 percent since
June of 2010, but the extreme undervaluation before that period of
time--in the years that led to June 2010--was relentless and tireless
and successful. One of the great success stories of currency
undervaluation is the Chinese doing so with theirs. We are at a point
where, rightly, we have lost patience.
When I first asked the Treasury of the United States to label and
conclude that China is a currency manipulator--months, even years ago--
there was an opportunity to take the kind of action this measure would
readily lead it to do, and it must do it now. This bill provides
consequences for countries that fail to adopt appropriate policies to
eliminate currency misalignment and includes tools to address the
impact of currency misalignment on American manufacturers, including
the use of countervailing duty law to impose tariffs on imports
benefiting from government subsidies.
Very simply, it provides tools that the American Government can and
should use when there are misalignments of currency that result from
government policies, and it eliminates some of the barriers in our
current law that now exist and restrict the American Government from
taking action to protect American businesses. So it is a good measure,
a commonsense step toward fairness and a level playing field for
American businesses, and it means we would protect ourselves, as we
have a right to do in an ongoing trade war. It is a war, not a shooting
war--perhaps not explicit--but it is a trade war we should acknowledge
and recognize as a fact of life for our businesses.
All this talk about currency and renminbi and the abstract and
seemingly arcane discussion, in economic terms, may seem far away to
many citizens of Connecticut, but it is not arcane or abstract to Steve
Wilson at Crescent Manufacturing of Burlington--a company that makes
precision fasteners, many of them used in defense of our country, sold
in this country as well as abroad. Crescent Manufacturing has hard-
working, skilled workers who compete with Chinese manufacturers whose
production costs are dramatically lower because of the undervalued
Chinese currency. Steve Wilson came to me and said, in effect: Give us
a level playing field. That is what this bill does. He said it not only
on his own behalf, as a manager and an owner, but on behalf of his
workers because the number of those workers was reduced as a result of
the lack of a level playing field.
Earlier this year, I worked with my colleague in the House of
Representatives, Congressman Chris Murphy, to conduct a survey of
Connecticut manufacturers. We gathered data from 151 different
companies all across the State of Connecticut, and the information they
shared paints a dramatic picture of the business climate for companies
in Connecticut and America today and the challenges they face as they
seek to create jobs and stay competitive. Of 151 manufacturers that
participated in our survey, 73 percent say they have Chinese
competition--73 percent are competing with Chinese companies--and 57
percent--almost 60 percent of all those companies--said China's refusal
to operate on a level playing field is harming their businesses. The
majority of those companies that responded to that survey--
manufacturers in Connecticut--say they want a level playing field or
they are harmed by unfair practices in China's undervaluing their
currency.
We all know, at this point, China deliberately manipulates its
currency to boost its exports, and Connecticut manufacturers know it
better than anyone. They have made it clear, if we are serious about
keeping American manufacturing competitive, if we want to make it in
America, if we want ``Made in America'' to mean what it should, and if
we want our economy to grow, we need to stand up to countries that rig
the system in their favor--unfairly in their favor.
The Alliance for American Manufacturing estimates our surging trade
deficit with China--largely caused by Chinese currency manipulation--
cost 2.8 million American jobs over the last decade, and that is 31,600
in Connecticut alone. These were jobs lost to our workers unfairly.
On March 25, 2011, the IMF declared that China's currency remains
``substantially undervalued.'' That is a serious charge from an
international agency that is not biased toward one country or another,
and it implies that China, in failing to address the undervaluing of
their currency, is in direct violation of the General Agreement on
Tariffs and Trade, which it has signed. Far from being contradictory to
international law, this bill serves the interests and intent of the
General Agreement on Tariffs and Trade. It serves article XXI of the
GATT Uruguay Round and allows a member of the World Trade Organization
and America to take action which it considers necessary for the
protection of essential security interests.
Nothing is more essential to our security than jobs. Nothing is more
critical than dealing with our trade deficit. Nothing is more important
than stopping the undervaluation of the Chinese currency that
consistently, unfairly, and unacceptably works against our exporters.
We must fight these fundamentally unfair trade practices of China.
American manufacturers deserve this level playing field, and this bill
will help to assure that for them.
I will continue to fight to protect Connecticut manufacturers and
businesses against any unfair trade practices anywhere in the world,
and this bill stops China and any other country that would misalign its
currency to the detriment of our security as a country and
Connecticut's manufacturers and businesses as well as those in the
country as a whole.
I thank the Chair, I yield the floor, and I suggest the absence of a
quorum.
The ACTING PRESIDENT pro tempore. The clerk will call the roll.
The assistant legislative clerk proceeded to call the roll.
The ACTING PRESIDENT pro tempore. The Senator from North Carolina.
Mrs. HAGAN. Madam President, I ask unanimous consent that the order
for quorum call be rescinded.
The ACTING PRESIDENT pro tempore. Without objection, it is so
ordered.
Mrs. HAGAN. Madam President, I come to the floor as one of a
bipartisan group of my colleagues, proud to be a cosponsor of the
Currency Exchange Rate Oversight Act, legislation that will send a
clear and direct message to China that the time for playing games with
American jobs is over.
As many of my colleagues have already explained on the floor, the
effects of China's currency manipulation are damaging to our economy.
It is estimated that China is undervaluing their yuan by more than 28
percent.
What does that mean? It means Chinese goods coming into the United
States are unfairly cheap, while goods made in the United States are
unfairly expensive when they are exported to China. In other words, it
means U.S. goods are less competitive in China, and Chinese goods do
have an unfair advantage in the United States. The results of this
distorted arrangement are harrowing: reduced American wages, decreased
GDP, and lost American jobs.
Since China entered the World Trade Organization in 2001, our trade
deficit with them went from $84 billion in 2001 to $273 billion in
2010, an increase of
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close to $200 billion. Madam President, $273 billion is larger than the
U.S. trade deficit with the OPEC countries, the EU countries, Canada,
Japan, and Mexico combined. This trade deficit has eliminated or
displaced over 2.8 million American jobs over the last 10 years. That
is an average of 310,000 jobs every year, and 70 percent of those jobs
lost from our trade with China were in one sector--manufacturing.
Ask anyone in my home State, and they will say the same thing: North
Carolina is a manufacturing State. From furniture to yarn, we are known
throughout the country and throughout the world for the quality of the
work we produce. But we are hurting. Between 2001 and 2010, North
Carolina has lost over 107,000 jobs. Those are 107,000 jobs due to
trade with China. Only five States in the entire country have suffered
a greater net job loss from our country's trade with China. Across the
country, the Nation has lost approximately 6 million manufacturing jobs
and has seen 57,000 manufacturing plants across our country shut down.
Last week, I traveled throughout the foothill regions in North
Carolina, in Burke, Rutherford, and Gaston Counties, three of our
counties with some of the deepest manufacturing and textile roots in
the State. The unemployment rate in these counties is close to 13
percent in Burke, close to 15 percent in Rutherford, and 11.3 percent
in Gaston, even higher than the all-too-high 10.4 percent average
across the State of North Carolina.
The No. 1, No. 2, and No. 3 concerns I heard at every stop I made
last week were: jobs, jobs, jobs. There were people, many of them
former manufacturing employees, who have lost their jobs. Many of them
are continuing to work hard, fighting for small businesses that they
now run and looking for survival. At the same time, so many people are
attending every job fair they can make. They cannot afford for
Washington to continue to allow China to get away with economic deceit
and manipulation. They cannot afford for us to continue competing with
China with one hand tied behind our back. What they need is for
Washington to draw a hard line, to act now, and to get tough on China's
currency manipulation.
The Currency Exchange Rate Oversight Act is straightforward. If the
Treasury Department, using objective criteria, determines that the
value of a currency is fundamentally misaligned, it will trigger a
process to correct that unfair misalignment. In other words, it allows
the United States to use every tool in our toolbox, including
countervailing duties, to ensure that American workers and companies
are competing on a level playing field.
Even though the legislation is simple, its positive effects would
ripple through the economy.
The ACTING PRESIDENT pro tempore. The Senator's time has expired.
Mrs. HAGAN. I ask for 2 more minutes.
The ACTING PRESIDENT pro tempore. Without objection, it is so
ordered.
Mrs. HAGAN. I thank you, Madam President.
A full revaluation of the yuan would mean 2.25 million jobs in the
United States, reducing the U.S. unemployment rate by at least 1 full
percentage point; an increase of the U.S. GDP of about $285 billion, a
nearly 2-percent boost; and a reduction to our budget deficit by as
much as $857 billion over 10 years. These are new jobs, more growth,
and lower deficits. That is exactly the kind of bill our country needs
right now.
It is going to require us to be tough. That is why America's workers
and North Carolina workers need us to draw this line in the sand. They
have always been told that if they work hard and play by the rules,
they can get ahead. But now China is not playing by the rules, and it
is undermining the ability of our workers and companies to succeed. We
need to hold them accountable.
American and North Carolina workers are some of the best and most
productive in the world. We know this. China knows this. If we compete
on a level playing field, we can prosper together. I encourage all my
colleagues to join in this bipartisan measure and vote for this bill.
It is what America's workers and companies need, and it is what they
deserve.
I yield the floor.
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