Mr. WHITEHOUSE. Mr. President, I rise today to speak in support of the Currency Exchange Rate Oversight Reform Act of 2011, and I would note the presence on the floor of one of its principal sponsors, Senator Sherrod Brown of Ohio, whom I have been very pleased to work with on this legislation.
I am proud to be one of the original cosponsors of this bill, an important piece of bipartisan legislation that will help protect American workers from the trade-distorting effects of currency manipulation. In particular, this legislation will allow us to fight back against policies China has used to gain an unfair advantage over American manufacturers.
Our American trade deficit with China rose from $83 billion in 2001--the year China joined the World Trade Organization--to $273 billion in 2010. That trend is discouraging enough on its own, but it is more troubling to consider that the growing trade deficit ultimately represents goods no longer made in the United States by U.S. workers. In fact, the Economic Policy Institute estimates that the trade deficit with China has cost 2.8 million American jobs over the past decade, including nearly 12,000 jobs in my home State of Rhode Island.
With so many families still struggling with unemployment in the wake of the recession, it is important that we examine just how we came to lose so many jobs to a single country and respond accordingly. It would be one thing if the answer was that China's workers are just more talented, their products are of higher quality, and they have simply bested us in the open market. But that is not the case. The evidence suggests another explanation: that China is gaming the international system.
First, China provides subsidies to critical industries, which likely violates World Trade Organization rules and gives Chinese companies an unfair competitive advantage over American manufacturers.
Second, by restricting exports of their raw materials, China drives up the cost of making products here in the United States.
Third, by turning a blind eye to or even facilitating the rampant theft of American intellectual property, China benefits from what may be the largest illicit transfer of wealth in history.
Finally, of course, China appears to be intentionally manipulating the value of its currency. Indeed, through controlled purchases of massive amounts of U.S. currency, the Chinese central bank has made the value of its currency--the yuan--artificially cheap relative to the U.S. dollar. Economists estimate the yuan is currently undervalued by as much as 28 percent against our dollar. The depressed value makes it 28 percent cheaper to buy goods from China than from the United States and it makes U.S. goods correspondingly more expensive. It is essentially a subsidy for Chinese products and a tax on U.S. products.
This is much more than a problem of abstract economic theory. The consequences of currency manipulation are deeply felt in households in Rhode Island and across the country. In the Presiding Officer's home State of Pennsylvania, in the floor manager's home State of Ohio, and all across the United States, it is felt by families who for generations have contributed to our growth as a nation by going to work every day and building things, from cars and boats to toys and electronics. These workers helped define our American character, from the start of the industrial revolution at Slater Mill on the banks of Rhode Island's Blackstone River through the first decade of the 21st century. But they have watched in recent years as job after job has been lost to China.
This unfair competition needs to stop. The advantage the undervalued currency gives to Chinese companies has put American manufacturers out of business and middle-class Americans out of work.
The Wall Street Journal reported last week on a study that measured the impact of unbalanced trade with China on communities across the country. The research shows that areas with industries exposed to Chinese import competition have higher unemployment rates and lower wages, and the people in these areas are forced to rely more heavily on government safety net programs.
That study ranked the Greater Providence, RI, area second among regions exposed to competition from China. This comes as no surprise to Rhode Islanders.
Rhode Island was once a world leader in textiles and jewelry manufacturing. But these industries have been hit hard by a flood of cheap imports from China, greatly straining our State's economy. If we regained the nearly 12,000 jobs estimated to have been lost to China over the past decade, our unemployment rate in Rhode Island would drop by two full percentage points.
As I travel around Rhode Island, I have heard time and time again from workers and business owners about the costs of Chinese currency manipulation.
George Shuster is the CEO of Cranston Print Works, a textile manufacturer that traces its roots in Rhode Island back to 1807. He told me:
We know first-hand the impact that China's disruptive policies have had as we have seen factory after factory close their doors around us. Addressing China's manipulation of its currency would be a good first step to bringing our trade policy to where it needs to be to help get American manufacturers moving in the right direction again.
Leslie Taito is the CEO of the nonprofit Rhode Island Manufacturing Extension Service. She has worked with a diverse set of manufacturers across the State to help them increase their efficiency and become more competitive. She told me this:
U.S. manufacturers are resourceful, agile, and fully capable to meet national and international demand. Currency manipulation creates an uneven playing field that has cost the United States countless jobs and has dramatically increased our trade deficit. I equate it to telling a boxer to go into the ring with one hand tied behind his back and asking him to come out the victor. Manufacturers in this country aren't asking for special consideration, they just want it to be fair.
Mr. President, this is why I made addressing currency manipulation a central part of my
``Making It in Rhode Island'' manufacturing agenda, and why I was one of the original cosponsors of the legislation that is before the Senate today.
The Currency Exchange Rate Oversight Reform Act of 2011 will strengthen the tools that we have at our disposal to counter the actions of countries such as China that choose to manipulate their currency rates. This legislation will first improve the oversight of exchange rates and allow us to identify currencies that are misaligned. For countries found to manipulate their currency values or that fail to correct a misalignment, this law will trigger tough consequences. Our trade enforcement agencies will gain clear authority to eliminate the advantage created by currency manipulation by imposing tariffs on products imported from offending countries. This should send a clear message to China, or any currency manipulator, that if they abuse the currency markets, they will not benefit.
Simply put, this legislation will help level the playing field for American companies. Economists have predicted that a fair market for our exports would reduce our annual trade deficit by between $100 billion and $200 billion. The resulting increase in production would add over one-quarter of $1 trillion to our GDP and create up to 2.25 million American jobs.
Are the Chinese squawking about this? Are the big multinational corporations who have no allegiance to any flag or nation squawking about this? Yes. Of course, they are. America has for too long been taken advantage of, allowing the wiles of others to erode our wealth. The winners at a rigged game will always object when the other party gets wise to the fact that the game is rigged and begin to do something about it.
But if we are to solve the problem of China's currency manipulation and stand up for American companies, American manufacturers, and American workers, we should pass this legislation.
I applaud my colleagues from both sides of the aisle for their work on this bill, and I commend in particular Senator Sherrod Brown of Ohio who is here on the Senate floor managing the bill right now.
I yield the floor.