FOR IMMEDIATE RELEASE: September 30, 2011
SCHUMER: CHINESE GLASS MANUFACTURERS ARE UNDERCUTTING NEVERSINK GLASS, PUTTING SULLIVAN COUNTY JOBS AT RISK – PUSHES SENATE TO PASS SCHUMER’S LEGISLATION TO EVEN THE PLAYING FIELD THIS WEEK
Today, at Neversink Glass, U.S. Senator Charles E. Schumer announced his push to pass legislation that would crackdown on China’s currency manipulation that is putting Sullivan County jobs at risk. Neversink Glass in White Lake has been outbid on several construction projects by Chinese companies that could offer lower prices thanks to their undervalued currency. China is also able to get materials and manufacture glass products at rates much below Neversink due to their devalued currency and low-paid workers. China’s currency manipulation has put American manufacturers at a severe disadvantage when competing for work, costing the country millions of jobs over the past decade. A recent report suggests that if China’s currency, the Yuan, was revaluated to its proper level, up to 2.25 million American jobs could be created thanks to an increase in the U.S. Gross Domestic Product. Schumer, who introduced the legislation with colleagues on both sides of the aisle, is pushing for quick passage in order to stop China’s unfair trade practices that are hurting American companies like Neversink. Schumer’s bill would ratchet up the pressure with a series of increasingly serious consequences, including possible imposition of additional duties on imports, if China failed to properly value its currency.
“China has used their currency to rig the game against Hudson Valley manufacturers like Neversink, killing jobs in New York and across the Country,” said Schumer. “Enough is enough; it’s time that we level the playing field and give New York businesses a chance to compete, fair and square. This strong bipartisan legislation is a clear, unwavering message from both parties to China’s leaders- the jig is up, it’s time to stop gaming the system or face severe consequences. China’s history of half-truths and broken promises on currency makes passing this legislation an economic imperative. I hope both parties will come together to pass this bill next week.”
"HVEDC salutes Senator Schumer's leadership and commitment to helping the businesses in the Hudson Valley,” said Mike Oates, President and CEO of the Hudson Valley Economic Development Corporation. “All our companies want is a fair playing field. We know that we can compete against anyone if given the chance. Whether it’s glass, steel or another manufactured product, New York Companies are being hurt by Chinese manipulation. Companies like Neversink Glass are the job creators we need to be helping, and ultimately China is making that harder and harder every day. Although this is a nationally significant issue, it is clear this is devastating hurting local economy and taking hard earned dollars away from our companies. We are proud to work with the Senator as he fights, with bipartisan support, to create the environment for our businesses to succeed."
“Recently, contractors have taken the extra step to purchase lower cost Chinese products to gain even more of a competitive edge, especially on large projects where significant money can be saved buying materials at high volume,” said Aubrey Steele, President of Neversink Glass Corp. “Not only has this adversely affected specialty subcontractors, it has taken its toll on many American manufacturers of architectural glass and metal. It is becoming increasingly difficult for these industry leaders to maintain the high level of quality we have come to expect while experiencing considerable drops in sales partially due to this formidable foreign competition. These same companies face the tough task of deciding which critical service components they must cut to stay competitive. With the unchanging financial situation we face and noticeable improvements made to Chinese construction products, owners will likely continue to move away from specifying American products unless trade improvements are made between the Americans & Chinese.”
Schumer toured the Neversink facility, joined by Neversink Glass CEO & President Aubrey J. Steele, Project Manager and Consultant and Craig Steele, Hudson Valley Economic Development Corporation President Mike Oates and economic development officials from throughout Sullivan County. Neversink has a proven track record and has been part of many major projects right here in New York. The SUNY Purchase Library, Kimsey Stadium at West Point, NY Botanical Gardens Visitor Center and several flagships stores in NYC, including Tommy Hilfiger, Gucci and Nokia. Although they were successful in landing these projects, and have completed them – fair competition and a level playing field isn’t always the case. Neversink has faced unfair competition from Chinese glass companies who are able to offer much lower prices on glass work for construction projects thanks to China’s severely undervalued Yuan. From 2001-2008, the Mid-Hudson Valley has lost approximately 14,800 jobs due to growing trade deficits with China, according to the Economic Policy Institute.
In the past few years, Chinese companies have bid on New York projects and were using workers who were being paid only a few dollars an hour, and sometimes even less, for the same projects companies like Neversink were bidding on. By doing this, their bids came in much lower compared to Neversink and other American companies. Some of these companies even had front organizations in New York City, hiding the fact that Chinese firms were behind the bid and compromising the entire process. By doing the right thing and paying workers a decent wage, Neversink was losing out to Chinese companies on huge projects. In another case, Neversink bid on a high-profile project and were ultimately outbid by a Chinese competitor. As has happened several times, after the work was done, the glass was either installed hastily or just incorrectly, and the safety of the building was compromised. This led to increased project costs and in turn the project had to go back out to bid again, making constructions costs all the more expensive.
China’s ongoing undervaluation of the yuan continues to cause severe economic disruptions and imbalances globally and is taking a huge toll on manufacturers and workers across the Hudson Valley and throughout New York. Moreover, failure to address China’s currency manipulation has emboldened China to countenance other market-distorting policies, including discriminatory indigenous innovation policies and inadequate protection of intellectual property, that benefit companies in China at the expense of U.S. companies and workers.
Over the past decade, the nation has lost approximately 6 million manufacturing jobs and seen 57,000 manufacturing plants shut down forever. According to a new Economic Policy Institute study, 1.9 million of those manufacturing jobs were lost or displaced as a result of increased trade with China and the Chinese government’s manipulation of its currency. Moreover, since China joined the World Trade Organization in 2001, our trade deficit with the country has increased from $83 billion to a record of $273 billion in 2010. Addressing currency manipulation would yield significant benefits to the U.S. economy. According to the study, addressing China’s currency manipulation would positively impact the U.S. economy over the next 18 to 24 months by creating a 1.9% increase in GDP [$285.7 billion], $71.4 million in annual deficit reduction, and 2.25 million American jobs.
The Currency Exchange Rate Oversight Reform Act of 2011 is intended to reform and enhance oversight of currency exchange rates, leveling the playing field for Hudson Valley manufacturers like Neversink. Specifically, the legislation:
Improves Oversight of Currency Exchange Rates. Under current law, Treasury is required to identify countries that manipulate their currency for purposes of gaining an unfair competitive trade advantage. In recent years, Treasury has found that certain countries’ currencies were undervalued. However, based on its interpretation of the law’s legal standard for a finding of “manipulation,” Treasury has refused to cite such countries as currency manipulators. The bill repeals the currency provisions in current law and replaces them with a new framework, based on objective criteria, which will require Treasury to identify misaligned currencies and require action by the administration if countries fail to correct the misalignment.
Clarifies Countervailing Duty Law Can Address Currency Undervaluation. Under existing trade laws, if the Commerce Department and the International Trade Commission find that subsidized imports, like glass, are causing economic harm to American manufacturers and workers, the administration must impose duties on those imports to offset (“countervail”) the benefit conferred on foreign producers and exporters by the government subsidies. Commerce already has authority under U.S. law to investigate whether currency undervaluation by a government provides a countervailable subsidy, although it has failed to do so despite repeated requests to investigate from a wide range of U.S. industries. The bill specifies the applicable investigation initiation standard, which will require Commerce to investigate whether currency undervaluation by a government provides a countervailable subsidy if a U.S. industry requests investigation and provides proper documentation.
Includes WTO-Consistent, Key Provision from Brown-Snowe Currency Reform for Fair Trade Act (S.328) and House-passed Currency Legislation. In previous countervailing duty investigations, Commerce has refused to find an export subsidy if the subsidy is not limited exclusively to circumstances of export (i.e., when non-exporters also may benefit). The bill precludes Commerce from imposing this bright-line rule, and clarifies that Commerce may not refuse to investigate a subsidy allegation based on the single fact that a subsidy is available in circumstances in addition to export. This clarification is supported by dispute settlement rulings of the World Trade Organization’s Appellate Body (e.g., in the case involving taxation of foreign sales corporations) and is the key element of the Brown-Snowe currency bill and the currency bill that passed the House (H.R.2378) in September 2010 with overwhelming bipartisan support.
Establishes New Objective Criteria to Identify Misaligned Currencies. The legislation requires Treasury to develop a biannual report to Congress that identifies two categories of currencies: (1) a general category of “fundamentally misaligned currencies” based on observed objective criteria and (2) a select category of “fundamentally misaligned currencies for priority action” that reflects misaligned currencies caused by clear policy actions by the relevant government.
Requires New Consultations. The legislation requires Treasury to engage in immediate consultations with all countries cited in the report. For “priority” currencies, Treasury would seek advice from the International Monetary Fund (IMF) as well as key trading partners.
Triggers Tough Consequences. For “priority” currencies, important consequences are triggered unless a country adopts policies to eliminate the misalignment.
Immediately upon designation of a “priority” currency, the administration must:
After 90 days of failure to adopt appropriate policies, the administration must:
After 360 days of failure to adopt appropriate policies, the administration must:
Limits Presidential Waiver. The President could initially waive the consequences that take effect after the first 90 days if such action would harm national security or the vital economic interest of the United States. However, the President must explain to the Congress in writing how the adverse impact of taking an action would be greater than the potential benefits of such action. Any subsequent economic waiver would require the President to explain how the adverse impact of taking an action would be substantiallyout of proportion to the benefits of such action. Furthermore, any Member of Congress may thereafter introduce a joint resolution of disapproval concerning the President’s waiver. Should the disapproval resolution be approved, the President may veto it, and the Congress would have the opportunity to override the veto.
Establishes New Consultative Body. The bill would create a new body with which Treasury must consult during the development of its report. Of the nine members, one would be selected by the President and the remainder by the Chairmen and Ranking Members of the Senate Banking and Finance Committees, as well and the Financial Services and House Ways and Means Committees. The members must have demonstrated expertise in finance, economics, or currency exchange.