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Public Statements

Currency Exchange Rate Oversight Reform Act of 2011

Floor Speech

By:
Date:
Location: Washington, DC

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Mr. UDALL of Colorado. Mr. President, I rise to discuss the recent vote on the Currency Exchange Rate Oversight Reform Act of 2011 that just passed in the Senate. The issue of currency misalignment and manipulation has brought to the surface a myriad of concerns that face our country's workers and businesses.

Coloradans are concerned that American businesses and producers are unable to compete fairly in the global marketplace when foreign countries keep the value of their currency artificially low. Those who have both supported and opposed this legislation agree that the artificial undervaluation of foreign currency has had a negative impact on the competitiveness of U.S. exports and that it needs to be remedied. In the case of China, numerous economists have estimated that its currency is undervalued by anywhere from 12 to 50 percent. The International Monetary Fund and the U.S. Treasury are also among those who have determined that the undervaluation of Chinese currency is real.

The implications of this artificial undervaluation include a detrimental effect on the competiveness of U.S. products abroad, making Chinese products artificially cheaper than U.S. products. The National Association of Manufacturers has affirmed ``that the excessive valuation of the dollar [relative to foreign currencies] simply prices U.S. exports out of the market.'' They highlight that their members ``have made it clear that the number-one factor affecting their exports is the value of the dollar.''

We can agree that artificial undervaluation of currency is a serious problem that harms our economy, our worldwide competitiveness, and our American workers. And it needs to be addressed. Yet the principle challenge here has been how we should ultimately go about making sure our economic partners, such as China, are honoring shared commitments to compete on a level playing field.

I understand the concerns of both sides in this debate and I know that many American businesses that have a presence in China and across our globe are concerned about the potential for retaliatory action from China. These companies, many of which also face ongoing issues of inadequate protection of intellectual property, discriminatory indigenous innovation and other industrial policies that limit access to Chinese markets, are understandably worried that China would further restrict their markets to fair competition.

I have also heard the frustration of domestic producers and U.S. workers who, together, produce a whole host of products in the U.S. and have felt the direct effect of being unable to compete fairly due to the discounting effect that China's currency undervaluation has on Chinese imports.

All of these concerns are valid, and despite some of my Senate colleagues' disagreement on whether to support the legislation that came before us, the common denominator in this debate has been a desire for fairness. And I believe that we will move closer to achieving fairness in the market place with a clearer commitment to a market-based exchange rate from our trade and economic partners.

As sovereign nations, we all have the economic well being of our respective countries at heart, but that does not justify the use of unfair trade practices, and we cannot turn a blind eye when this happens. Nor should we allow the specter of a ``trade war'' to distract us from the fact that China is not abiding by the international rules that were put in place to help prevent trade wars in the first place. China agreed to abide by these rules of the international community--including rules about intellectual property rights and unfair restrictions to market access, as well as rules against intentional currency misalignment--and we should not accept their adherence to certain rules but not others. They all apply.

After taking a closer look at the issue of China's currency undervaluation, taking into consideration the concerns that I have heard on this issue from a range of Coloradans, and reviewing the legislative proposal that was before us, I believed that the U.S. Senate needed to send a signal to China, and others who may be intentionally undervaluing their currencies. The message is that Americans value playing by the rules and that we expect our trade partners to live up to our shared commitment to compete fairly in the global marketplace.

I ultimately came to the conclusion that this bipartisan legislation, known as the Currency Exchange Rate Oversight Reform Act of 2011, was an appropriate way to send a signal that we are serious about working bilaterally and/or multilaterally, in a manner consistent with World Trade Organization agreements, to develop a responsible plan so that currencies identified as fundamentally misaligned can be valued appropriately based on relevant market factors. In the event that the misaligned currency goes unresolved, the legislation also authorizes the administration to take action to protect American businesses and workers from the discounting effect that the undervaluation of the currency can have on imports from the respective country. I believe that the mechanisms built into this legislation can promote a collaborative effort to address any undervaluation of a foreign currency, while also sending the message that we cannot allow American businesses to be undercut.

My choice to support this legislation aligns best with the common sense and pragmatic thinking of Coloradans. Unfortunately, China continues to characterize efforts on the part of the United States to ensure a level playing field for international trade as ``protectionist.'' Supporting fair competition, fair access to markets and fulfillment of the commitments of our shared expectations among economic and trade partners is far from protectionist. As former President Ronald Reagan once stated, ``To make the international trading system work, all must abide by the rules.'' I urge China to act in good faith and to remain committed to reaching economic stability through cooperative action that encourages fair competition. The legislation I just supported is one component to reaching that goal, and I believe it supports the American businesses and workers who are propelling our nation to continue to be the leader in the global economic race.

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