[Congressional Record (Bound Edition), Volume 150 (2004), Part 6]
[Senate]
[Pages 7657-7658]
[From the U.S. Government Publishing Office, www.gpo.gov]




                          CHINESE COMPETITION

  Mr. GRAHAM of South Carolina. Mr. President, in 2001, World Trade 
Organization members accepted China into the organization only after 
negotiating the most complex accession agreement in WTO history. Under 
their accession agreement, China committed to adopting a market- and 
rules-based economy and special safeguards for the domestic industries 
of other WTO members that could be severely injured by surges of 
imports from China's non-market economy. China has yet to live up to 
their commitments. China's problems stem from a significant lack of 
intellectual property right enforcement, to the continued dumping and 
transshipping of textiles, to the subsidizing of their steel industry. 
China also manipulates their currency, the yuan, in order to gain an 
unfair competitive advantage.
  These unfair trade practices seriously jeopardize many United States 
industries, including the textile and steel industries. The textile 
industry has been hit particularly hard by unfair trade with China. 
Since 1997, more than 250 textile plants in the U.S. have closed. With 
quotas on textile and apparel set to be totally phased-out on January 
1, 2005, it is not unrealistic to expect even more job losses and 
factory closings in the textile industry. Quotas are set under the 
Multifiber Arrangement, MFA, an international agreement that allows 
countries to impose quotas on the level of goods imported from 
individual supplier countries. The MFA was designed to prevent a 
worldwide crisis in textile and apparel trade. Specifically, it was 
needed to keep very low wage producing nations from overwhelming global 
markets.
  If these quotas are lifted, China is poised to control 70 percent of 
the textile and apparel market share. Allowing China to dominate world 
markets in this sector will result in the devastation of many third 
world economies, resulting in widespread economic and social 
instability.
  If the goals of the World Trade Organization are to increase global 
prosperity and economic advancement through orderly trade, and 
especially to advance the development of the third world through 
orderly trade flows, we have to ask ourselves the following question: 
Does our current trade policy with China help further those goals, or 
will it continue to cost millions of United States' manufacturing jobs 
and undermine global advancement in general and in the third world 
specifically?
  With the expiration of the quotas, the United States will see even 
more of the products they buy manufactured in a country that allows 
their workers to be treated poorly. Workers in Chinese factories suffer 
serious, routine and on-going abuse at the hands of their employers. 
Health and safety conditions almost always fail to meet Chinese law or 
international standards, and workers regularly work illegally long 
hours for overtime pay that is not calculated according to law. Chinese 
workers also face harsh disciplinary measures and the use of heavy 
fines for minor infractions of factory rules.
  We need to let China know that if they keep dumping and transshipping 
textiles, permanent quotas will be put in place. If China continues to 
steal intellectual property rights, they will find themselves before 
every WTO tribunal that exists. One of the best investments the U.S. 
ever made was spending billions of dollars during the Cold War to 
prohibit the spreading of communism. We need to show similar strength 
when it comes to standing up against China's communist dictatorship 
that trades unfairly, oppresses its people, and bleeds our economy dry.
  What I would like to see my country do, Republican and Democrat, is 
to ask the Chinese to stop cheating; to try to persuade the Chinese 
government through international organizations such as the WTO, to stop 
stealing market share and become a better member of the Family of 
Nations. There's a lot of resistance to any idea about change. Our 
opponents argue that current trade policy is appropriate because of the 
fact that it may reduce prices to consumers. This is only true if you 
review what hidden costs we are paying. Such costs include: over 3 
million lost manufacturing jobs in the past 5 years, frozen wages, 
health and pension benefits for workers that have managed to remain 
employed, shrinking tax base for Federal, State and local government. 
Maybe the greatest cost, however, is to our national security. There is 
no doubt that the United States was the single greatest military power 
in the 20th century because of its industrial strength. If we make 
China the new industrial superpower, will that not translate into China 
becoming the single greatest military power of the 21st century?
  The large economic growth China has experienced over the last several 
years is not going to the average Chinese citizen. In fact, it is 
estimated that just 0.16 percent of the Chinese population controls 65 
percent of the nation's U.S. $1.5 trillion liquid assets in the 
Mainland bank deposits. The income distribution in China is likely to 
be the most unequal in the world. Rather than using this economic 
growth to help China's 800 million rural residents who earn the 
equivalent of just 80 cents per day, it is going to their military 
disproportionately.
  Today, China is the world's largest purchaser for foreign military 
weapons and technology. China's defense industry has become far more 
productive in the last five years and improvements can be expected as 
the Chinese economy continues to grow. China is now more than doubling 
its budgeted defense spending this year as part of an aggressive 
military modernization strategy. And some European countries are even 
pushing the European Union to lift the arms trade embargo on China. 
What I considered at one time to be a regional problem is a national 
security problem.
  Rigged and unfair international trading rules are a key cause of the 
U.S. manufacturing crisis. China's unfair trade practices are costing 
United States jobs and jeopardizing our manufacturing base. They have 
shown that

[[Page 7658]]

they are not yet committed to participating in a rules-based global 
trading system and are not yet willing to make the necessary steps to 
transition into a market-based economy.
  China continues to manipulate the currency markets to keep the dollar 
artificially high and its own currency, the yuan, artificially low. By 
playing the currency market in this manner, China effectively 
subsidizes their exports to the U.S. and places a tariff on U.S. 
shipments to China. This mercantilist practice has caused serious 
damage to the U.S. manufacturing sector. The U.S. Congress must take 
action.
  Senator Charles Schumer and I have introduced legislation that would 
require China to adopt a market-based system of currency. The goal of 
this legislation is to remove China's unfair currency advantage and the 
detrimental impact that it is having in the U.S. and abroad.
  Something must be done to alleviate the detrimental economic impact 
China is having on our manufacturing industry. I urge the Leadership to 
allow a clean vote on this important legislation. I believe it will 
receive overwhelming bipartisan support and give the administration one 
more tool to get the Chinese to uphold their WTO obligations.

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