The momentum is building for the United States to take strong action to counteract manipulation of its currency by China’s government.
More than 130 members of Congress signed on to a letter from Reps. Mike Michaud (D-Maine) and Tim Ryan (D-Ohio) delivered today that urges Treasury Secretary Timothy Geithner and Commerce Secretary Gary Locke to take strong action up to and including countervailing duties (CVD) or tariffs because of currency manipulation.
Michaud and Ryan’s letter is the latest in growing calls by Congress and by top economists for the United States to act on the manipulation of currency by China’s government. If Geithner does act, the administration could impose remedies, such as tariffs, to create a fairer trade balance with China.
AFL-CIO President Richard Trumka, who co-chairs the Fair Currency Coalition, thanked Michaud and Ryan for their letter:
The working families of this country need jobs now. If we want a recovery that will invest in manufacturing, boost exports, balance trade, and create jobs we must stop China and other countries from illegally manipulating their currency. China’s prolonged undervaluation…is an illegal export subsidy. That is why the U.S. government must allow CVD cases to proceed. American workers expect their government to stand up for them.
The AFL-CIO, U.S. manufacturers and many economic experts maintain that China deliberately undervalues its currency to keep the value artificially low so it can boost exports and discourage imports—running up the U.S. trade deficit and costing U.S. jobs.
An AFL-CIO report shows China’s fixed currency rate artificially lowers the price of its goods by 40 percent, effectively subsidizing China’s exports, putting U.S. companies at a competitive disadvantage and creating a record trade deficit.
Several experts, including Nobel Prize-winning economist Paul Krugman and United Steelworkers USW President Leo Gerard, on Friday told a forum on “Currency Manipulation: How Should the U.S Respond?” trade remedies are what we need. The forum was co-sponsored by the Economic Policy Institute (EPI) with the Alliance for American Manufacturing (AAM).
China’s currency manipulation has cost between 1.5 million and 3 million good American manufacturing jobs. C. Fred Bergsten, director of the conservative Peterson Institute for International Economics, told the forum:
If there is going to be a serious jobs program, the exchange rate of the dollar must be at the center of the debate.
The Fair Currency Coalition also called this week for Congress and the Obama administration to take a strong stand against currency misalignment because it threatens our national security. The coalition, which includes business and labor groups, said in a statement:
The results of Beijing’s policy…have created a serious and growing threat to national security. The capital and technology transferred to China and the production capacity built and sustained in China by Beijing’s export surplus have been used to expand the size and capabilities of the People’s Liberation Army. Over the past decade, annual military expenditures have risen by more than 400 percent.