FOR IMMEDIATE RELEASE: June 8, 2005
Schumer Urges President To Convene Summit On China Trade Immediately, Quickly Address Currency Manipulation
Senator Addressed Council on Foreign Relations Regarding China’s Unfair Trade Practices and Currency Manipulation
Schumer: ‘The True Free Trade Position is to Make Sure that China is Playing Fair in Global Trade’
U.S. Senator Charles E. Schumer urged President George W. Bush to convene a summit on China trade immediately in remarks at a breakfast with the Council on Foreign Relations (CFR). Schumer was asked to address the CFR on China trade and currency practices because he has been the leader in bringing China’s unfair trade practices and currency manipulation to the forefront of public policy debate. Schumer is the author of the China Free Trade Act, co-sponsored by Schumer and Senator Lindsay Graham (R-SC). Schumer urged the Administration to call for a summit on China trade with key Administration officials, including the Treasury Department’s new Special Envoy on China, and members of the House and Senate.
Schumer said, “The true free trade position is to make sure that China is playing fair in global trade. Those who are apologizing for China’s intransigence on currency manipulation and other unfair trade practices are the real protectionists in this debate.”
“The President calling a summit would be a golden opportunity for all of the key players on trade and public policy to discuss the next steps in getting China to stop its currency manipulation,” Schumer continued.
The Yuan has been tightly pegged to the dollar since 1994 (approximately 8.28 Yuan to the dollar). During that period of time, China’s economy has grown dramatically, averaging over 8% per year. If China’s currency freely floated in the market, as is the case with virtually all major world currencies, it would have appreciated substantially. The result is that many economists estimate that the yuan is now undervalued from 15% to 40%. In order to hold the value of the Yuan within its tight and artificial trading band, the Chinese government has intervened in its foreign exchange markets. The practice of “currency manipulation” to gain a trade or competitive advantage violates World Trade Organization and International Monetary Fund agreements, of which China is now party.
A symptom of currency manipulation has been record trade deficits with China. Last November it was reported that our trade deficit with China grew by 25%. This number represents one quarter of our national trade deficit. Since 2000, the U.S. trade deficit with China is up over 94% to $162 billion dollars. In one year from 2004 to 2005, the trade imbalance increased 30%. In computer manufacturing the deficit is up over 300%. In apparel manufacturing the deficit is up 50% over 4 years, but textile manufacturing alone is up 100% in the first four months of this year alone. In tool and dye, and heavy metal imports, Chinese imports are up almost $3 billion in four years.
The bipartisan Schumer-Graham China Free Trade bill allows for a 180-day negotiation period between the U.S. and China, after which China must revalue its currency. If the negotiations are not successful, the tariff would be applied to all Chinese products entering the United States. If the President certifies to Congress within 180 days of enactment that China has made a good-faith effort to revalue its currency upward, he may delay the imposition of the tariffs for an additional 180 days. If at the end of that 180-day period the President determines that China has developed and started actual implementation of a plan to revalue its currency, the President may delay imposition of the tariffs for an additional 12 months.