Making Trade Fair

Feb 11, 2015 Issues: Trade

What if the U.S. could create up to 5 million jobs, increase our nation’s gross domestic product by up to $720 billion and provide a shot in the arm to American manufacturing — all at no cost to taxpayers? It’s a plan that would unite Democrats and Republicans and garner support in the House and Senate.

In fact, it has.

This week, together with Sens. Lindsey Graham (R-S.C.), Charles Schumer (D-N.Y.) and Debbie Stabenow (D-Mich.) and Reps. Tim Ryan (D-Ohio) and Tim Murphy (R-Pa.), we’re introducing bipartisan legislation that would stand up for American workers when countries like China cheat by manipulating their currencies to give their exports an unfair advantage over products made in the USA. We are also urging the Obama administration to include strong and enforceable currency obligations in the Trans-Pacific Partnership (TPP), which is currently being negotiated.

Our trade deficit with China reached a record high in 2014, at $342 billion. For far too long, the Chinese government has devalued its own currency against the U.S. dollar. This distorts prices and undermines the market in two ways. Chinese manipulation makes American-made goods exported to China artificially more expensive and at the same time artificially cheapens Chinese imports to the United States. This puts American manufacturers at a serious disadvantage and makes it more difficult for American companies to compete against Chinese companies.

This is not how the free market is supposed to work.

Currency manipulation has cost us millions of jobs and will continue to undermine American families unless we take action. The Peterson Institute estimates that interventions in currency markets by foreign governments have cost U.S. workers as many as 5 million jobs over the last decade.

There is bipartisan support for addressing currency manipulation, and Congress must act now to prevent more harm to our economy.

The bipartisan legislation we’re announcing this week would enable the American government to treat currency manipulation like other illegal trade subsidies, allowing American companies to petition for relief when foreign competitors use currency manipulation to deflate their prices. This would allow the Department of Commerce to impose countervailing duties to offset the impact of currency manipulation on a U.S. industry. These duties are not “punitive” in nature, and the bill is fully consistent with World Trade Organization rules. Instead, it would create a process for American companies to seek relief from unfair currency manipulation, just as they would for other illegal trade practices — like government subsidies or dumping.

Similar currency manipulation bills have received broad bipartisan support in the past. The Senate passed a strong currency manipulation bill in 2011 by a vote of 63-35 and the House of Representatives passed similar bill in 2010 by a vote of 348-79.

The bills we’re introducing this week, however, are not enough by themselves to end the practice of currency manipulation. Currency manipulation makes U.S. exports more expensive, but the countervailing duty bills only provide relief to U.S. industries that are materially injured by subsidized imports.

We need more tools in our toolbox, and the U.S. government also needs to include provisions in our trade agreements that would deter our trading partners from manipulating their currency in the first place. We have such an opportunity in the TPP negotiations.

Bipartisan majorities in the House and the Senate have urged the administration to include strong and enforceable currency obligations in the TPP, which includes a number of former currency manipulators, such as Japan. Other countries interested in joining the TPP in the future — such as China and Korea — are also current or former currency manipulators. Yet, one and a half years since letters were circulated and specific proposals began to surface, the administration has not yet broached the subject in the TPP negotiations.

If we’re serious about rebuilding America’s manufacturing industry — and the millions of good-paying jobs that come with it — we need foreign trade that is not already stacked against our national interests. That means addressing currency manipulation and preventing trade cheats from costing American jobs.

Brown is Ohio’s senior senator, serving since 2007. He sits on the Agriculture, Nutrition and Forestry; the Banking, Housing and Urban Affairs; the Finance; and the Veterans’ Affairs committees. Sessions is Alabama’s junior senator, serving since 1997. He sits on the Armed Services, the Budget, the Environment and Public Works, and the Judiciary committees. Levin has represented congressional districts in Michigan’s Detroit suburbs since 1983. He sits on the Joint Taxation Committee and is ranking member on the Ways and Means Committee. Brooks has represented Alabama’s 5th Congressional District since 2011. He sits on the Armed Services; the Foreign Affairs; and the Science, Space and Technology committees.

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