Ahead of Today’s G-20 Finance Ministers Meeting, Casey Again Calls on the White House to Act on Currency Manipulation
WASHINGTON, DC— U.S. Senator Bob Casey (D-PA), Chairman of the Joint Economic Committee, called on the Obama Administration to aggressively stand up to ongoing Chinese attempts to gain an illegal trade advantage over Pennsylvania workers and companies. A letter signed by a bipartisan group of senators was sent to the Obama Administration ahead of today’s G-20 meeting in Washington.
In the letter to Treasury Secretary Timothy Geithner, Casey called on the Obama Administration to confront China on its currency manipulation that artificially makes Chinese goods less expensive than similar American-made products. China's currency manipulation, a violation of international trade law, is a major contributor to America's $273 billion trade deficit with China and costs the United States thousands of jobs each year.
In their letter, the senators say of China's illegal action on currency: "For too long, this issue has festered, harming not only American companies and workers, but also the economy of every country that meets its International Monetary Fund (IMF) commitments to allow the level of its currency to be determined by markets.... China's illegal practices make Chinese-produced goods cheaper than similar products made in America, driving up our trade deficit with China and putting Americans out of work. The United States' trade deficit with China reached a staggering $273 billion last year, costing our country thousands of jobs."
The senators' letter concludes: "We urge you to work together with all countries harmed by currency manipulation to press China to allow the level of the RMB to be determined by markets, not government interventions. When everyone plays by the same rules, our entrepreneurs and workers can compete and win in the global economy."
Senator Casey has been a vocal opponent of Chinese currency manipulation. He has repeatedly called on the Obama Administration to more aggressively confront China and he is pushing legislation that would make it harder for the Administration to avoid taking action against China.
The Currency Exchange Rate Oversight Reform Act of 2011, which Senator Casey introduced with Senators Charles Schumer (D-NY) and Debbie Stabenow (D-MI), would vigorously address currency misalignments that unfairly and negatively impact U.S. trade. If passed, the legislation would provide less flexibility to the Treasury Department when it comes to citing countries for currency manipulation. It would also impose stiff new penalties on designated countries, including duties on the countries' exports and a ban on any companies from those countries receiving U.S. government contracts.
The full text of the letter follows:
April 14, 2011
The Honorable Timothy J. Geithner
Secretary of the Treasury
1500 Pennsylvania Ave. NW
Washington, DC 20220
Dear Mr. Secretary,
We write to urge you to make fundamental currency misalignment a central issue at the G-20 meeting in Washington, DC this week. For too long, this issue has festered, harming not only American companies and workers, but also the economy of every country that meets its International Monetary Fund (IMF) commitments to allow the level of its currency to be determined by markets.
The consistent interference of a few countries in currency markets creates an uneven global playing field, perversely encouraging other countries to intervene as well. The resulting currency misalignments distort global markets, creating instability at a time when the world can ill afford it.
While multiple countries are guilty of currency manipulation, China unfortunately stands out from the rest. Its mercantilist policies occur on a grand scale. In the fourth quarter of 2010, China intervened in currency markets by purchasing $2 billion worth of foreign currency a day, adding $199 billion to its foreign currency reserves. Not surprisingly, in its recent 2011 Global Economic Outlook, the IMF calls the RMB "substantially weaker than warranted" and finds a "key motivation for the acquisition of foreign exchange reserves seems to be to prevent nominal exchange rate appreciation and preserve competitiveness."
China's policies work as intended: The RMB has had almost no appreciation against the dollar since May 2008. China's illegal practices make Chinese-produced goods cheaper than similar products made in America, driving up our trade deficit with China and putting Americans out of work. The United States' trade deficit with China reached a staggering $273 billion last year, costing our country thousands of jobs.
The IMF cites the accumulation of official foreign exchange reserves as "an important obstacle to global demand rebalancing." Removing this obstacle should be a key U.S. priority. Ironically, China's refusal to allow the RMB to appreciate in a meaningful way is contrary to its own best interest. Economists agree that China needs to rebalance its economy to rely more on domestic consumption than on export-led growth. This necessary rebalancing would ultimately tame Chinese inflation, improve global economic growth, and remove a key barrier to a more fruitful U.S.-China relationship.
The United States does no one a favor by downplaying this crucial issue. We urge you to work together with all countries harmed by currency manipulation to press China to allow the level of the RMB to be determined by markets, not government interventions. When everyone plays by the same rules, our entrepreneurs and workers can compete and win in the global economy.
Sincerely,
Sen. Bob Casey
Sen. Debbie Stabenow
Sen. Sherrod Brown
Sen. Olympia Snowe
Sen. Carl Levin
Sen. Sheldon Whitehouse
Sen. Benjamin Cardin
Sen. Kirsten Gillibrand
Sen. Jack Reed
Sen. Richard Blumenthal
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