Currency Exchange Rate Oversight Reform Act of 2011
Floor Speech
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Mr. SCHUMER. Mr. President, I would like to talk on the bill that we are debating on the floor about China currency. Let me say a few things. To me and to many of my colleagues on both sides of the aisle, very little we could do could be more important in both the short term and the long term than to require China to pay a price if they continue to flaunt international trade rules and manipulate their currency, causing their imports to America--their exports to America, our imports, to be much cheaper than they should be, and causing American exports to China--their imports of our goods--to be more expensive than they should be.
In the short term, it has been estimated by EPI that 2 million jobs could be created over 2 years if we pass this legislation and China's currency were no longer misaligned. But there is a long-term issue, and that is this: The bottom line is, what is our future in this country? It is good, high-paying jobs. It is companies, large and small, that create high-end products, products that take a lot of know-how, products that take a lot of skill to create, products that basically are the high end in terms of both manufacturing and services. That is our future.
Those are our crown jewels. When I ask--as many of us have asked the question--how in a worldwide economy can America compete, the answer is those companies. I admit that most of those companies are not large; they are smaller companies. They are small business people with great ideas for new ways of providing a service or creating a product. They are the people who employ about 65 percent of the new jobs in America. They are our future. Some of them will grow into very large companies. Many will stay employing 100, 200, 300, or 400 people. But they are on the front lines of world trade.
What have we found over the last decade? In almost 10 years, since China joined the WTO, we have lost 2.8 million jobs, simply due to the Chinese Government's manipulation of currency. We have lost thousands more jobs elsewhere, because China steals our intellectual property. China has a mercantilist policy of taking an industry and nurturing it with local subsidies and making products so cheap that they export and overwhelm our market. That is what happened with solar cells, solar panels. They can take an advantage such as rare earths and oppose WTO rules and say to companies, if you want these rare earths, which you need for your products, you have to make it in China.
They do this over and over. Why do Senator Brown and Senator Graham and I and many others feel so strongly about this? Because we know if the present trend continues, as Robert Samuelson, the economist, noted in an op-ed in the Washington Post the other day, basically it is a disaster for America. If, when a young entrepreneur creates a product or service, that entrepreneur is overwhelmed by a Chinese product that has unfair advantage, we don't have a future. That is it. Many people worry about the budget deficit as the biggest problem America faces. It is a large problem and I hope we solve it. I will work hard to solve it. But, to me, the No. 1 problem America faces is how do we become the production giant we were over the last several decades but no longer seem to be. We are indeed a consumption giant. We consume more than anybody of our own products and other people's. But you cannot be a consumption giant for many years on end if you are not also a production giant.
What is a major external factor that contributes to making us a consumption giant rather than a production giant? It is the Chinese manipulation of currency, because it discourages production in America and encourages consumption of undervalued Chinese goods at the same time. The anguish that many of us feel about the future of this country translates directly into this legislation. I know there are lots of academics who sit up in their ivory towers, editorial writers, who love to look at this legislation and without even examining its consequences say that is protectionism. This is not protectionism. In fact, this legislation is in the name of free trade, because free trade implies a floating currency. That is what was set up at Bretton Woods. That was the equilibrium creator when things got out of whack. But it doesn't exist for China. A lot of countries have pegged their currency in the past and we paid no attention, because if you have .01 percent of GDP, and you are worried your tiny little currency will be overwhelmed, to peg it by world trends, that doesn't create much trouble. When you are the second largest economic power in the world, largest or second largest exporter in the world, to peg your currency totally discombobulates the world trading system.
Given the danger to the future of our country, and given the danger to the continuation of world trade by China continuing its currency manipulation, why isn't there more of an outcry? That is the question I ask myself. I don't have a good answer. Perhaps it is because those editorial writers and big thinkers don't talk to the manufacturers of high-end products in New York State I talk to, who see they cannot continue against China unfairly because of currency manipulation. Whether it is a ceramic that goes into powerplants, which I talked about yesterday, or even a high-end window that is used for major office buildings and museums, China uses its currency manipulation to gain unfair advantage over our companies up and down the line. Maybe those in the ivory towers don't talk to the manufacturers on the ground as so many of us do because that is our job and that is our living. Maybe it is because global companies have fought our provision in the interest of their shareholders.
I don't begrudge the big companies. Their job is to maximize their share price. If firing 10,000 American workers and moving them to China, and creating those 10,000 jobs in China gives them more profitability, in part because of currency manipulation, yes, that is what corporations are supposed to do. But that is not in America's interest. It may have been in General Electric--a company that has lots of New York presence and that I like very much--it may have been in their interest to sign a contract for wind turbines and give to China intellectual property in return. But it sure wasn't in the interest of the workers in Schenectad, even if it might have been in the overall interest of the GE shareholder. Maybe it is because the Business oundtable and the Chamber of Commerce, which is dominated by the larger manufacturers and service companies and the larger financial institutions. They don't care about American wealth and jobs; they care about their own profitability and sales and share price, and if China has an unfair advantage, so be it. That is not their job. Maybe that is the reason. That is beginning to change, by the way.
When I last visited China, I met with the heads of the China divisions of many of our largest companies, and I had met with the same people several years before--and intermittently some of them in between--and their tone has totally changed. They are exasperated with China's mercantile policy. One of the manufacturers, who had been one of the leaders in saying don't touch China, because they exported a ton of goods there, had a different tone. He said: We can only export certain of our goods--the ones China doesn't make--and the rest we have to make in China and in certain provinces. That is a large, huge multibillion dollar U.S. company.
Another company, a major retailer, told us they cannot run their stores the way they wish in China because China dictates what they can and cannot have on their shelves. Half of the products on their shelves in American stores cannot, by Chinese Government dictate, be on the Chinese store shelves. Some of our large companies are sort of realizing that letting China get away with all of these violations of free trade, all these violations of WTO, no longer serves their interests, though, admittedly, they have not come around to support our bill.
Then there are those who are fearful that the Chinese will retaliate. That one drives me the craziest. I grew up in Brooklyn. When there were bullies and you didn't stand up for yourself, they bullied you and bullied you some more. If you stood up to them, yes, there was going to be some retaliation, but it was a lot better than giving in. That is what we have done with China. Will China retaliate if this bill becomes law and hundreds of American companies grow to have countervailing duties imposed? Yes. But the Chinese know they have far more to lose in a trade war than we do. Their economy is far more dependent upon exports--just look at the percentage in terms of GDP--than ours. They are far more dependent upon the American market than we are on the Chinese market, as important as it is to many of our companies.
While China will retaliate in a measured way, they will not create a trade war. It is not in their interest; they cannot afford to. I have news for those who are worried about a trade war: We are in one. When China manipulates its currency, steals intellectual property, and uses rare earths to lure businesses and takes our intellectual property and brings it to factories in China, subsidizes them against WTO rules, and then tries to export the product here, as they are doing with solar panels, that is a trade war, as millions of Americans who have lost their jobs realize. So we are in the war. We may as well arm ourselves so that we might win.
The bottom line is very simple: I hope this bill moves forward. I hope it goes through the House. A large vote in the Senate tomorrow will be a message to the House--Senator Brown's bill and, of course, his and ours have been combined. But Senator Brown's bill passed in the House a few years ago, and I hope the President rethinks things and signs it, because if he does, my prediction is that China, which never backs off when it is in their own economic interest, will, because it will no longer be in their economic interest because penalties will be imposed and equality will be imposed upon them once this bill is law. So they will let their currency float--maybe not as quickly as we want but far more quickly than it happens now, once this bill becomes law.
In my view, the arguments that have been raised against America taking action to deal with unfair Chinese currency manipulation are outdated, wrong, and ineffectual. I have been arguing the other side, our side, for 5 years. When Senator Graham and I first started talking about currency manipulation, imposing a tariff, both the Wall Street Journal and New York Times editorial boards--one very conservative and one very liberal--said China should be allowed to peg its currency. We have made progress in the strength of our intellectual arguments. We have to take that strength and translate it into action. Millions of American jobs, and ultimately trillions of American dollars of wealth, and nothing less than the future of our country are at stake.
I yield the floor and suggest the absence of a quorum.
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