Currency Exchange

Floor Speech

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.

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