Putting a stop to China's currency manipulation (Rep. Timothy Ryan)

Nearly six years ago, I introduced similar currency reform legislation because of the clear, negative impact that Chinese currency manipulation had on job creation in my Northeastern Ohio congressional district. It became clear that China’s corrupt trade practices have damaged communities throughout the United States for many years.  

Many institutions and individuals, from the International Monetary Fund to highly-respected international economists, the American manufacturing industry and my fellow legislators, have pointed to China as the most egregious practitioner of currency manipulation. So much so, that the renminbi is currently considered to be undervalued by as much as 40 percent. China’s continued manipulation of its currency artificially lowers the cost of Chinese exports and reduces the buying power of the renminbi – both significant contributions to the massive trade imbalance between the U.S and China (the largest in the world between any two countries).  

The bottom line is this: we buy far more Chinese goods than the Chinese buy our goods.  Our American manufacturers cannot compete with undervalued goods, and must either lower costs, outsource jobs, or simply close their doors. Manufacturing is the foundation of our economy; for every manufacturing job created in America, up to six additional jobs are spun off. As a result of this trade imbalance with China, the U.S. manufacturing industry declined by 21 percent between 1998 and 2008 and millions of good jobs were lost. Indeed, our growing trade deficit with China may yet displace another 512,000 to 566,000 jobs in 2010. Something must be done and the House has taken the first step. 

American manufacturers have been rocked by a difficult economy; forcing them to compete against countries who openly flout international trade rules will do nothing to encourage economic recovery.  Take a look at any of the manufacturers in my district and the effects of China’s unfair practices are evident. For example:  Backyard Buddies, a small car lift manufacturer, was forced to shrink its workforce as a result of competition with cheaper and inferior Chinese imports. Wheatland Tube, who has manufactured steel pipe in the region since the 1920s, has stated that its raw materials cost is the same as the finished Chinese version exported to the U.S. These companies are not only competing with their counterparts in China – they are unfairly being forced to compete with the Chinese government itself.  

If signed into law, H.R. 2378 will level the playing field by providing the Administration with the ability to place proportional tariffs on imports that benefit from the fundamentally undervalued currency of a government seeking to gain unlawful trade advantage in the world market.  

Detractors of the bill, including House Minority Leader John Boehner (R-Ohio), Republican Whip Eric Cantor (R-Va.) and Republican Chairman Mike Pence (R-Ind.), as well as the U.S. Chamber of Commerce have stated that H.R. 2378 does not conform to World Trade Organization (WTO) standards. That is untrue. As modified by the House Ways and Means Committee, this legislation is fully compliant with all WTO regulations. Critics also warn of initiating “conflict” with the People’s Republic of China but in 2009, the U.S. trade deficit with China was $227 billion. How does a decade of economic exploitation not already constitute conflict? Diplomacy between our nations has not been successful in unpegging the renminbi from the dollar. The time for talk has passed; the time for action is now.

Whether you are a Democrat or a Republican, a liberal or a conservative – millions of American jobs have been lost and hundreds of thousands of families across our country has suffered as a result of China’s unlawful trade practices – including currency manipulation. By resolving this issue, we are projected to create as many as one million American jobs, which would provide tremendous economic relief to small and mid-size manufacturers throughout Ohio and the United States. We make things in America and the Currency Reform for Fair Trade Act is a step in the right direction toward ensuring that we continue to do so for decades to come.
 
Note: H.R. 2378 must be approved by the U.S. Senate and signed by the President before it becomes law.

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