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Domestic Manufacturers Urge Obama to Back Up Tougher China Talk With Immediate Currency-Manipulation Bill Push
By Kevin L. Kearns and Alan Tonelson
Thursday, February 04, 2010
WASHINGTON, February 4 – The 1,900-member U.S. Business and Industry Council today urged President Obama to back up his tougher, post-Massachusetts, China trade rhetoric at yesterday's meeting with Senate Democrats by demanding quick Congressional passage of a strong currency-manipulation bill – one in fact that he co-sponsored while running for President, but that has languished on Capitol Hill.
The Council also proposed that, given the U.S. economy's still dire straits, the President consider more sweeping measures to help U.S. producers and employees victimized by currency manipulation and other forms of trade cheating by China and America's other economic competitors.
Said USBIC President Kevin L. Kearns, "If President Obama really wants to create more U.S. jobs by tackling China's trade cheating, he'll demand that Congress's Democratic leadership immediately pass the strong currency-manipulation bill he endorsed as a Presidential candidate. Further delay will only make clear to all – including the Chinese – that Obama is all bark and no bite."
The bill in question, which has been re-introduced in both houses of Congress this session with bipartisan sponsorship, would enable industries harmed by foreign governments' currency manipulation to file trade complaints with the U.S. International Trade Commission. In general, these cases are relatively inexpensive to take on – a major consideration for industries comprised mainly of smaller companies.
The President announced his co-sponsored the bill in the spring of 2008, when the Democratic presidential primaries came to manufacturing-heavy northeastern and midwestern states like Pennsylvania and Ohio. But soon after his inauguration, the President's Treasury Department backtracked on then-Treasury Secretary-designate Geithner's statement the President believed China to be a currency manipulator. Several months later, in its semi-annual report to Congress, Obama's Treasury found that China is not manipulating its currency for artificial trade advantage at all.
"Obama's failure to bring change to the China trade issues represents a campaign promise brazenly broken to fully competitive domestic manufacturers and their hard-working employees," said Kearns. "If concrete actions – like pushing for immediate Congressional passage a strong currency bill – don't quickly follow the President's new-found interest in foreign anti-competitive practices and their negative impact on U.S. jobs, these companies and their workers will surely conclude that the President is playing them for fools."
Added Kearns, "Failing to move decisively on currency manipulation could also cost Obama and Congressional Democrats dearly this fall. They urgently need ways to create more jobs in the private sector and promote healthy, sustainable U.S. growth without further boosting America's already dangerous budget deficits and related debts, or raising taxes to contain them. Offsetting the effects of currency manipulation fits the bill perfectly. In fact, the legislation not only cost the government nothing, but by promoting genuine growth and initially generating tariff revenue, punishing currency manipulation would help in part to repair America's broken finances."
Kearns also recommended that Obama consider broader measures to fight predatory trade practices by China and America's other economic competitors. "As important as the currency bill is," he explained, "as is the case with the U.S. trade law system generally, it is fundamentally piecemeal and reactive. Newly filed trade cases could take many months to produce results even if the bill passed tomorrow."
He continued, "In order to fend off a second dip in the Great Recession, bolster the American economy's productive capacities once again, and save his party's political skin in the process, Obama should seriously consider imposing immediate tariffs on all imports from countries that manipulate their currencies, as well as putting in place a border adjustable tax equal to our trading partners' VAT export rebates, which place American producers at a competitive disadvantage in their home. These steps also have the advantage of being cost-free to government and producing much-needed revenue.
"Such measures admittedly would be harsh," Kearns acknowledge. "But the U.S. and world economies still face emergency conditions. Lopsided trade and investment flows must be righted to promote healthy global recovery, and the other approaches tried so far have not yielded any progress whatsoever. The President promised change and new leadership but became bogged down in microscopic details. Trade policy is an important area where he can concentrate on the big picture, show determined leadership, and bring about the changes needed to return the global economy to sound footing."
Kevin L. Kearns, President of the USBIC Educational Foundation, is Editor-in-Chief of AmericanEconomicAlert.org. and a former Foreign Service Officer with extensive defense trade experience. Alan Tonelson, a columnist for AmericanEconomicAlert.org, is a Research Fellow at the Foundation. His recent book on globalization, The Race to the Bottom (Westview Press), is now in paperback.
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