Casey Calls on Admin to Act on China Currency Manipulation

WASHINGTON, DC— Following a preliminary decision this week by the U.S. Department of Commerce suggesting that it would not investigate currency manipulation by China, U.S. Senator Bob Casey (D-PA) called on the Commerce Department to reconsider and to protect American manufacturing from China’s unfair trade practices.

“Given the importance of this issue to businesses in Pennsylvania and across the country, I strongly urge you to revisit this issue prior to issuing the final decision in November,” wrote Senator Casey.  “At this time of economic uncertainty, we need to utilize every tool at our disposal to protect American businesses and promote job creation.   It is clear that there is a widespread negative impact on our domestic industries as a result of Chinese policies.  An investigation will surely find that China’s currency manipulation has negatively impacted American manufacturing.”

In the preliminary announcement this week, the Commerce Department ruled in a case brought by aluminum manufacturers and workers that China improperly subsidies factories and that duties should be imposed to offset those subsidies.  However, the Commerce Department avoided an investigation of China’s currency manipulation that gives Chinese exports an unfair advantage.

Senator Casey is a supporter of bipartisan legislation that 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 tariffs on the countries’ exports and a ban on any companies from those countries receiving U.S. government contracts.

Last month, Senator Casey joined a bipartisan group of senators in sending a letter to President Obama calling for stronger action on behalf of U.S. businesses and workers competing against unfair trade practices conducted abroad, particularly the manipulation of currency by the Chinese government to unfairly boost exports.

Earlier this year, Senator Casey spearheaded a bipartisan letter to Treasury Secretary Timothy Geithner calling on him to list China as a currency manipulator.

See below for the full text of Senator Casey’s letter to Secretary Locke:


September 2, 2010

The Honorable Gary Locke
Secretary of Commerce
1401 Constitution Avenue, NW
Washington, DC 20230

Dear Secretary Locke,

I write you today concerning the Import Administration’s preliminary decision not to investigate two allegations that Chinese currency undervaluation constitutes a subsidy under United States countervailing duty law.  While I continue to disagree with the Commerce Department’s interpretation of its responsibility in such cases, I am particularly concerned with the specific reasoning employed in this case.  Given the importance of this issue to businesses in Pennsylvania and across the country, I strongly urge you to revisit this issue prior to issuing the final decision in November.

According to the Import Administration, the two allegations in question do not meet the statutory standard for initiating an investigation “under the requirement that benefits provided under China’s unified foreign exchange regime be specific to the enterprise or industries being investigated.”  While it is likely that there is widespread impact on our domestic industries as a result of Chinese policies, it may also be true that certain industries are disproportionally impacted by China’s currency undervaluation.  In fact, we cannot determine the true impact and specific harm to an enterprise or industry without an investigation.  It is the responsibility of the Commerce Department to conduct such investigations, especially because the subsidy is widespread and harmful to countless American businesses.

In general, I have concerns with the Department’s broad understanding of its role in investigating such allegations.  In February, I sent a letter with 14 of my colleagues clarifying Congressional intent.  More recently, many of us sent a letter to President Obama reiterating the same concerns.  The preliminary decision reflects a continuing disconnect between the agency’s view of its responsibility and Congressional intent.  The Import Administration has the authority, vested by Congress, to investigate currency manipulation as a subsidy.  Given the continuing inaction on the part of the Department, I look forward to working with my colleagues to clarify the issue further through legislation.    

At this time of economic uncertainty, we need to utilize every tool at our disposal to protect American businesses and promote job creation.  It is clear that there is a widespread negative impact on our domestic industries as a result of Chinese policies.  An investigation will surely find that China’s currency manipulation has negatively impacted American manufacturing.   Earlier this year, the Economic Policy Institute released a report estimating that 2.4 million jobs have been lost in the U.S. since China joined the WTO in 2001; 95,700 of which were in Pennsylvania.  These losses are attributable in large part to the undervaluation of the yuan, which places American manufacturers at a significant disadvantage.  Therefore, the Import Administration must act with urgency to consider China’s currency manipulation a countervailing subsidy in current and future trade enforcement cases.  

Thank you for your consideration.  I hope the Import Administration reconsiders its interpretation of current law when making its final decision.  

Sincerely,

Robert P. Casey, Jr.
United States Senator

                                                                        
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