[Congressional Record Volume 162, Number 24 (Wednesday, February 10, 2016)]
[Senate]
[Pages S808-S810]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
TRADE FACILITATION AND TRADE ENFORCEMENT BILL
Mr. SESSIONS. Mr. President, tomorrow the Senate will be bringing up
the Customs bill that I intend to support moving to. I believe it has a
number of good provisions, and I hope to be able to support its final
passage.
But first, I want to bring attention to the weakened currency
provisions that the conference report included. This is not the
language that initially passed the Senate, but instead is much weaker.
The Senate, several times, has affirmed the need to provide the
Treasury Department and the Department of Commerce tools to prevent
currency manipulation.
In 2011, the Senate passed such a bill to provide the Commerce
Department with enforcement mechanisms by a vote of 63-35.
Second, in 2013, 60 Senators signed a letter to the U.S. Trade
Representative, calling for the inclusion of enforceable currency
provisions in Trans-Pacific Partnership.
Finally, in May of 2015, the Senate passed by a 78-to-20 vote this
Customs enforcement bill, which, for the first time, included new tools
that are necessary to defend American manufacturers from foreign
currency manipulations--the language to confront currency cheating that
the Treasury Department acknowledges is occurring, but they have
refused to take action to confront it.
That original bill would have required, where this kind of currency
manipulation occurs, action be taken to fix currency manipulation.
Unfortunately, that language was removed from the conference report.
I think it is time--and I think a bipartisan majority of this Senate
believes it is time--for us to pass enforceable currency protection
measures and make sure they make it to the President's desk.
In June of 2015, a New York Times poll showed that 63 percent of
Americans believe that trade restrictions are necessary, and only 16
percent of Americans believe that the Trans-Pacific Partnership would
actually increase American jobs. I am absolutely convinced the American
people are correct on that, based on a study of previous trade
agreements and the analysis of studies by Tufts University and other
groups.
A May 2015 poll conducted by Ipsos, a leading polling and
communications firm, found that 73 percent of the U.S. public believes
Congress should oppose any ``international trade agreement that does
not specifically prohibit currency manipulation.'' That is a strong
polling number.
A second Ipsos poll, conducted last year, found that 79 percent of
respondents said that it was important for the trade deal to include
enforceable currency protections.
In August, the Chinese Government devalued its currency 4 percent,
creating a regional currency war in that area involving Australia,
Malaysia, and South Korea. All those fell against the United States
dollar, making their imports to the United States less expensive and
our exports to their countries more expensive. It happens just that
way.
Former Federal Reserve Chairman Paul Volcker, one of the great heroes
of the economic rebound of the 1980s, has said that years of trade
negotiations can be wiped out in minutes by currency manipulation. I
don't think there is any doubt about that.
These depreciations throughout Asia further disadvantage American
workers because they force our workers to compete against international
competitors who receive discounts, in effect, on their exported goods
in the form of artificially depressed currencies. These devaluations
have a real impact.
I have talked at length to steel manufacturers in my State. They have
all told me that steel manufacturing is being hammered by this kind of
currency manipulation, dumping, and other unfair, improper trade
policies. But they specifically mentioned currency. Foreign market
manipulations have virtually eliminated profit margins that were
already slim in the steel industry.
I had a conversation a few hours ago with a major paper company which
said that currency manipulations have hurt their exports. They are
still making the exports, but it has eliminated their profit. It is
very problematic for them. They have to have profit, but they are
trying to maintain their production, keep Americans working, and keep
the plants operating, even though their profit margin has been hurt
substantially by currency manipulation.
In June of 2015, eBay reported that international currency
fluctuations eliminated 8 percent of its sales. Instead of 6 percent
sales growth, the company reported a 2 percent decline. Our foreign
competitors are exporting their unemployment to the United States. That
is the way it is done: You reduce your currency, and you export your
products to the United States at a lower price. Our foreign competitors
keep their people working and undermine the ability of American
manufacturers to keep their employees working. Sometimes American
plants are totally closed.
A December 1 Wall Street Journal article highlighted the fact that
the Chinese yuan had increased against most other major currencies but
fallen 3 percent against the dollar. They let it decline against the
dollar, thereby maintaining their trade advantage with the United
States--their trade surplus, our trade deficit with China. Our trade
deficit with China increased during January and increased substantially
during the fourth quarter of last year. Our exports are down, our
imports are up, and our trade deficit is up.
A big part of that is improper manipulation of currency by our so-
called trading partners. It is time we said no to this. We have the
leverage and the capability of doing so. They need us more than we need
them.
When Governor Romney ran for President 8 years ago, he was in a
debate and explained it very succinctly: If you don't stand up--in this
case, to China--they will run over you. Critics say that if we stand up
to China, it will create a trade war. But we are in a trade war; we are
just not fighting. Finally, he said: And, anyway, they have a lot more
to lose than we do in such an event.
We have no obligation--as a matter of fact, we must stop being a
patsy for those who take advantage of us. They need our markets. They
desperately need to be able to sell huge amounts of
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products in our markets. If they will not comply with the rules of
trade, we have a right to say no and to limit access to our markets.
They say that would hurt American consumers--perhaps some--but in the
long run, we cannot allow American manufacturing to be decimated by the
sustained manipulation of trading partners. We have to have a
manufacturing base in this country. The American people know this, and
they are worried about that.
Even a Walmart executive has said: If nobody is working in America,
who is going to buy cheap products from abroad? He even started a
program to try to buy more from America.
Even the Department of Treasury in its October 2015 exchange rate
report said, ``Our judgment is that the [Yuan] remains below its
appropriate medium-term valuation.'' In other words, it is depressed.
China devalued the Yuan. They gained market advantage over the United
States and other countries.
On the face of all of this, the White House has refused to adopt any
enforceable measures. The Treasury Department repeatedly acknowledges
we have a problem, but they have refused to take any action to confront
it. This is the kind of weakness we cannot accept. The time has come in
America where we cannot afford to lose a single American job to unfair
trading partners. We have to end this. We have to defend our people who
are hurting.
While the Trans-Pacific Partnership agreement that has now been
signed by the President--off last week in New Zealand, 7,000 miles
around the world. The President never even talked about it. Why didn't
he talk about it? Why didn't they highlight it? Why did they want to
sign it 7,000 miles away? The reason is, the American people don't want
it. He didn't really want anybody to know he had signed it, and they
hope they can slip it through Congress at some point. But I don't
believe it is going to happen. I think too many things are being raised
and discussed that show we have to be careful about these trade
agreements. In particular, this is one that should not pass. The White
House claims that the TPP includes a side measure addressing currency
manipulation, but any study reveals that it does not have any real
enforcement mechanisms.
The Wall Street Journal on November 5 wrote this: ``Mexico, Canada
and other countries signaled they were open to the [currency] deal when
they realized it [would not] include binding currency rules that could
lead to trade sanctions through the TPP.''
Get that? They were objecting to this currency rule. They like to
manipulate their currency, and they don't want to be subject to
sanctions if they manipulate it. When they found out the truth--and the
truth is that the currency manipulation language attached to TPP means
nothing--then they said it was OK. So objected to addressing currency
manipulation in the TPP until they found out this proposed fix meant
nothing.
On November 6, the Japanese Finance Minister, Mr. Taro Aso, said that
``there [will not] be any change'' in Japan's currency policy. In other
words, by signing on to the TPP, after studying the agreement, Japan
realized they are not going to have to change their policy. There is no
teeth to the President's side-agreement.
We were expecting that this currency language would be placed on the
Customs bill that we would vote on tomorrow. It was passed in the
Senate, and it went on the Customs bill. But when it went to the
conference committee, President Obama said: No, we are not having this
currency language in it. The conference committee eventually
capitulated, and struck the enforceable currency provisions in their
report. So we have no real enforceable mechanism now to ensure that
American workers and American manufacturing are able to maintain a
level playing field with our trading partners in this regard.
The statement by Japan's Finance Minister caused Ford Motor Company
to immediately object to and oppose the Trans-Pacific Partnership
agreement. They did it the day it was released. In their press release,
Ford said they could not support such a deal in which currency rules
fell ``outside of [the] TPP, and . . . [failed] to include dispute
settlement mechanisms to ensure global rules prohibiting currency
manipulation are enforced.'' They could not support it.
Ford and all these companies are placed under terrific pressure to
sign on to these deals. A lot of them that signed on and said they will
support it don't like it, but they were basically put in a room and
asked: What do you need to do? We will agree to some things if you will
agree to support the deal. Many felt it was going to pass anyway, and
they got a few little trinkets--a few little gifts out of the TPP that
they liked out of the 5,000 pages that it consists of, and they have
agreed to either be silent or support the deal. But many of these
companies like Ford are very uneasy about it.
So where are we today? I was very pleased that one of the strong
supporters of trade in Congress--the new Speaker of the House, Paul
Ryan--announced yesterday that there was not support in the House to
pass the TPP now, and, in fact, he has concerns about it. He has been
an advocate of these trade agreements. I have been worried about that.
But I was very pleased that at least now, in the temporary situation,
he has indicated that he has doubts about the agreement, it is not
going to have the votes in the House.
Our leadership has indicated they don't intend to bring it up
immediately, either. I think that is a good decision. I believe we as a
nation need to be studying how this works and studying whether these
agreements are actually helping us. Or are they accelerating the
decline in American manufacturing?
The Bush nor the Obama White House has taken strong actions to deal
with currency manipulations. This administration and its own Treasury
Department continues to reassure us that they are doing everything they
can to protect American manufacturing from unfair currency
manipulation. However, they repeatedly rejected Congress's efforts to
give the White House the tools they need to help enforce our laws. One
of the best ways to do this is to give the White House the ability to
implement countervailing duties, but they have opposed those efforts
and steadfastly seen to it that they are not made law.
Last year, in the spring, we had a month-long debate about the
importance of these measures. I think a lot of our Members learned a
good bit in the course of that. The Senate passed a TPP negotiating
objective calling for enforceable measures in the President's trade
agreement. What did the President do? He threatened to veto the Customs
bill if it included the kind of currency language that I have just been
describing.
In fact, the White House even issued a Statement of Administration
Policy--a SAP--on this question stating that ``the Administration
opposes the way the [Customs] bill uses the countervailing duty process
to address currency undervaluation.'' With that objection, the
conferees took out the language, so the bill we will vote on tomorrow
does not have the language in it that passed in the U.S. Senate with 78
votes in favor.
Last year, I wrote the President and asked him a few simple
questions. I believe these are simple questions that the American
people are entitled to have answered by the leader of our country who
is proposing and pushing the TPP.
One, I asked him to state whether the TPP would increase or decrease
our trade deficit. Shouldn't we know that? Our trade deficit is
surging. Some try to contend that trade deficits don't matter. They do
matter. They do matter if your factory is closed. Trade deficits reduce
GDP. Some studies say that about one-half percent of growth in GDP has
been reduced as a result of the trade deficit. It does impact America.
I further asked the President, two, whether the TPP would increase or
decrease the number of manufacturing jobs in the United States.
Third, I asked him how the TPP would affect the average hourly wages
for the American middle class. Shouldn't he tell us that? Shouldn't we
be told whether wages are going to go up or down? Shouldn't we be told
whether the trade deficit would increase? Shouldn't we be told whether
manufacturing jobs are going to increase or decrease?
What have they said? This is so clever. I think the media deserves
criticism for not talking about it more. All they have ever said was
that the TPP would increase jobs in the exporting industries. They
don't say how many jobs
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are being lost when American factories are closed. In fact, the
Administration used to make specific job claims, but stopped doing so
once the Washington Post gave their claim that the TPP would create
600,000 jobs four Pinocchios.
Let's go back to 2011, the U.S.--South Korean Free Trade Agreement. I
voted for it. South Koreans are good people. They are allies of ours.
We do business with them. I signed on to that agreement. When the
President signed it, he stated to the American people it would increase
our exports by $10 billion a year.
We have had a chance to look at that. How has that promise come out?
Have we increased our exports? Well, we did increase our exports. It
was eight-tenths of $1 billion last year. I think we will be a little
over $1 billion this year--not 10, 1. What about Korean exports to the
United States? How did that come out? They increased annually $12
billion a year. What about our trade deficit from 2010 through 2015?
The trade deficit with South Korea increased 260 percent.
Are these trade agreements effective? Are they helping America? Are
they fulfilling the promises being made for them? I don't think so. The
President has repeatedly rejected bipartisan efforts to put protections
in for American workers. He clearly did not follow Congress's
negotiating objectives. He has ignored an issue which the Senate
overwhelmingly approved, and he failed to negotiate enforceable
currency protections for American workers.
American manufacturers cannot wait longer. It is time to give them
the tools they need, a fair ability to compete, and a level playing
field. The Customs bill that is before us is a step in the right
direction. It ensures the Commerce Department and Customs and Border
Protection share information more efficiently. It gives the Customs and
Border Protection new tools to identify and stop illegal trading
practices. It provides early notification of trade surges, which helps
ensure stable prices of goods here at home, but it is important to note
the Customs bill is not a perfect solution. There is still work to be
done.
As I noted, Paul Volcker pointed out, all of these agreements can be
eliminated overnight through currency manipulation. We can pass this
Customs legislation and send it to the President, but we must realize
that the protections created in this legislation, the new tools that
are provided to CBP, can be made irrelevant by our competitors that
manipulate exchange rates to benefit their exports.
We have that problem now in China, Japan, South Korea, and other
countries. I am not going to be satisfied until the President signs
legislation granting the Commerce Department real powers to protect
American workers and American manufacturing from these devastating
market manipulations.
Our government does not offer such subsidies to American
manufacturers. There are other subsidies, too, that foreign countries
offer that we don't offer. These subsidies and currency manipulations
are forbidden by international trading standards, but they go on
anyway, and nothing is done about it. We must not allow other countries
to take advantage of us any longer.
I will note some of the quotes that we heard about this subject, but
no action of significance has been taken.
On September 3, Treasury Secretary Jack Lew in an interview on CNBC
said, ``[China has] to understand, and I make this point to them quite
clearly, that there's an economic and political reality to things like
exchange rates.''
He is talking about currency exchange rates. There is a political
reality there. In other words, Mr. Lew, who should be doing something
effective besides just talking, acknowledges that currency rates have
real impact on Americans.
He goes on to say:
They need to understand that they signal their intentions
by the actions they take and the way they announce them. And
they have to be very clear that they're continuing to move in
a positive direction. And we're going to hold them
accountable.
We haven't been holding them accountable.
Mr. Lew continues: ``I think that we have been very clear for a very
long time with China, how they manage their exchange rate is a matter
of great concern to us and that they need to be willing to let market
forces drive the value up, not just drive it down.''
That is true, but they are not doing it, and China is going to
continue to manipulate their exports until some action is taken to stop
them.
He said in his interview:
I think it is something we will discuss at the G-20, is any
temptation to slip into what might look like a competitive
devaluation. It's both unfair and it ultimately leads to a
worse global economy.
I think there is some truth to that. He is acknowledging that there
is a problem. What he is saying is our response to devaluation--it is
unfortunate if we are put in a position where we devalue, where Korea
devalues, where Vietnam devalues, where other countries in the world
devalue. That is a currency war and that is not helpful. What needs to
happen is we need to push back against countries that are improperly
devaluing and stop that and try to create a currency system worldwide
that serves our Nation in an effective way. It is part of the whole
economic future of America.
Every business journalist is talking about this. They have different
views about what ought to be done, if anything, but everybody talks
about the impact.
This is T. Rowe Price. They did their fall 2015 Economic Outlook
Report.
To be sure, the U.S. economy remains the world's largest
and most innovative. But this summer's dramatic plunge in
China's stock market and the unexpected devaluation of its
currency quickly reverberated around the globe--triggering
market volatility, dimming growth prospects for certain
industries and the countries, and exacerbating pressure on
emerging markets.
I don't think anybody would dispute that. That is common business
knowledge. T. Rowe Price's Outlook Report says:
The devaluation, along with the government's unsuccessful
intervention in its plunging stock market, also undermined
confidence in China's leadership and, most important, in its
ability to manage the transition of its economy from one led
by investment and exports to one more driven by domestic
services and consumption.
This is where we are. We need to get this ship on the right path, and
we need to not adopt the TPP. We need to use the leverage we have as
the greatest market in the world that all these countries want access
to. We have the leverage. They have more to fear from a trade war than
we do. We must put an end to it because we owe it to this country. The
day we can give away more and more jobs and assume that this has no
negative impact on the American economy is over. Wages are down in this
country. The percentage of Americans of working age actually working
today is the lowest we have had in nearly 40 years. We have had a
tremendous drop in the percentage of males from 24 to 55, high working
years, who are actually working in jobs today. It is a troublesome
trend. We need to reverse that.
We need to put people to work and get them off welfare. We need to
put them in good job training programs to help them take jobs that
already exist in the country. We can't afford to bring in hundreds of
thousands and millions of people from abroad to take jobs. Our people
should be trained and be taken. That is so basic as to be without
dispute, it seems to me.
I think the Customs bill that we consider tomorrow is worthy of our
support. In the long run, I do believe that if we don't confront the
trading issues that are facing America, we will regret it, and we will
continue to see adverse economic consequences for the citizens we
represent.
I yield the floor.
I suggest the absence of a quorum.
The PRESIDING OFFICER. The clerk will call the roll.
The senior assistant legislative clerk proceeded to call the roll.
Mr. McCONNELL. Mr. President, I ask unanimous consent that the order
for the quorum call be rescinded.
The PRESIDING OFFICER. Without objection, it is so ordered.
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