[Congressional Record (Bound Edition), Volume 157 (2011), Part 10]
[Senate]
[Pages 14689-14691]
[From the U.S. 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 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

[[Page 14690]]

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

[[Page 14691]]

to $273 billion in 2010, an increase of 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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