As America struggles with surging debt and unemployment, Washington must pursue policies that will encourage economic growth and job creation without increasing the debt. Streamlining regulations, simplifying the tax code, and unlocking America’s domestic energy reserves are all things we can do to create jobs and improve our fiscal outlook. These kinds of reforms will remove the handcuffs from American industry and allow us to compete on better footing against nations like China.
President Obama has suggested this kind of approach—removing government barriers to productivity—is a “race to the bottom.” But this view represents a fundamental misunderstanding. The real race to the bottom would be trying to compete with China’s state-managed economy through more federal subsidies and regulation. But embracing free enterprise—and unleashing the creative potential of the greatest workforce on earth—is a race to the top and a race we will always win.
America can have a manufacturing renaissance that would substantially strengthen the middle class. Not only would this be good for our economy, but for our security. Should a global crisis erupt, America ought to have some measure of self-reliance. As it stands now, we are a nation steeply in debt with a shrinking role in the global market.
However, if we are going to revitalize our manufacturing core, we must immediately confront China’s aggressive currency manipulation. For years, China has systematically, strategically, and aggressively undervalued its currency—putting American manufacturers out of business and Americans out work.
Most economists agree that China undervalues its currency, the Renminbi (RMB), by approximately 30 percent. The Employment Policy Institute (EPI) explains that “this intervention makes the RMB artificially cheap relative to the dollar, effectively subsidizing Chinese exports.
Currency intervention also artificially raises the cost of U.S. exports to China and the rest of the world, making U.S. goods less competitive in that country, and in every country where U.S. exports compete with Chinese goods.” In other words, the Chinese give their products a 30 percent discount in the U.S. and make our exports cost 30 percent more in other countries.
I have joined with a bipartisan group of lawmakers to address China’s abusive trading practices. The Currency Exchange Rate Oversight Reform Act of 2011, S. 1619, compels the Commerce Department and the International Trade Commission (ITC) to take currency manipulation into account when estimating countervailing and dumping duties.
The legislation would charge a duty on certain imported products only after the ITC and Commerce Department conduct an investigation that determines that a nation’s currency misalignment is providing an illegal subsidy to its exports—and that a U.S. company has been injured. Any action must occur in compliance with the World Trade Organization. In other words: this measure upholds the rule of law. This has nothing to do with protectionism; rather, it’s about protecting the principles that make trade work.
Our commitment to commerce and trade is fundamental to our nation. America has always been a country with open ports and open markets. When trade is conducted properly, it creates a rising tide of prosperity here in America and around the world. More than that, the voluntary exchange of goods promotes the free exchange of ideas. Trade has helped us to export the values of a free, democratic society. But, like democracy itself, trade must operate under a set of rules and values.
Nations whose economies have historically struggled are those that have failed to uphold the rule of law—nations that have been unable to enforce contracts and protect the integrity of financial agreements. When companies form a business partnership, they sign a contract to ensure each party meets its obligations. The principle is the same with trade: a trading partnership with China must be founded on principles upon which both parties can agree. And it is the job of our leaders to negotiate these agreements on behalf of American workers—not against them. Yet President Obama remains silent while China has pursued its national interests at our expense.
We don’t live in a perfect world. Other nations, like China, are more than willing to exploit our goodwill to gain political, strategic, and economic advantage. The time has come for the United States to defend its core economic interests. American workers are the best in the world. They aren’t asking us for a handout or a subsidy—what they’re asking for is leaders who will defend their legitimate interests on the world stage. So far, this hasn’t occurred. It’s time for the Senate to lead where this White House—and those before it—have not.