A bipartisan group of U.S. lawmakers has launched a new legislative effort to punish China and other countries for currency manipulation. House and Senate lawmakers appeared with representatives of American industry and labor organizations.
Members of Congress have complained for years about what they call deliberate currency manipulation by China, saying it has cost millions of U.S. manufacturing jobs, and harmed American industries by making U.S. exports more expensive while forcing American companies to compete with a flood of cheap Chinese exports.
When he was in the U.S. Senate, now U.S. President Barack Obama joined legislative efforts to take action over the currency issue.
The Obama administration has so far pursued a cautious approach with Beijing. In April the Treasury Department declined to formally label China as a currency manipulator, saying only that the yuan was undervalued.
With Treasury Secretary Timothy Geithner scheduled to go to Beijing next month for talks on trade and other issues, the legislation introduced in the House and Senate could again become an irritant in bilateral relations.
If approved by Congress - past efforts to pass currency measures have failed -- the legislation could result in China or other countries facing additional duties on their goods.
Saying American workers and businesses have a right to compete on a level playing field, Republican Senator Jim Bunning says the time has come for action. "This isn't free trade and it certainly isn't fair trade. This is one of the root causes of our massive trade deficit with China totaling $1.4 trillion since 2001," he said.
In 2008, the U.S. trade deficit with China was $266 billion. U.S. Commerce Department statistics show the deficit in the first three months of this year running 10 percent below last year's pace.
Under the legislation, American companies could ask the U.S. government to seek punitive duties, consistent with U.S. obligations under the World Trade Organization (WTO), to counter the economic impact of under-valued currencies. Under-valuation itself would be treated by the U.S. government as a prohibited subsidy.
Charles Blum represents the Fair Currency Coalition, an alliance of industry, labor and other groups working against currency manipulation. "Properly understood, what we propose is not protectionist but would be an antidote to protectionism. It is not a threat to economic recovery here or abroad, but a necessary contribution to it. It focuses on no particular country, but establishes a rule to be applied equally through all countries at all times," he said.
Ohio Democratic Representative Tim Ryan believes the U.S. financial crisis and the anxiety it has created for American workers, has created an atmosphere in which the legislation can be approved by Congress. "Emotionally the industrial Midwestern states especially are ready to coalesce, I think business and labor, to really push this thing and we're going to put the full court press on here," he said.
Democratic Senator Debbie Stabenow, is co-sponsoring the Senate version of the bill. From economically hard-hit Michigan, she says the U.S. economy is losing ground every day to China's currency practices. "It's time for other countries to play by the rules. We have had enough of this. We are losing jobs because other countries cheat, and it has got to stop," he said.
Tom Buffenbarger is President of The International Association of Machinists and Aerospace Workers. "Americans have become long on despair and short on dreams in part due to the misalignment of currency. For too long, far too long, our government has sought alternatives to address this problem and have none of them have worked," he said.
Bill Kerins is President of Wheatland Tube, a company forced to close plants and lay off workers in recent years as inexpensive Chinese-made steel pipe flooded U.S. markets. "China has contributed and continued to undertake unfair trade actions that have harmed the U.S. manufacturing industry. We have witnesses this first hand as a company and as an industry and have sought recourse through fair trade laws," he said.
As of this week, 40 lawmakers in the House of Representatives were supporting the legislation, called the Currency Reform for Fair Trade Act.