A strong bipartisan majority in the U.S. Senate tonight voted in favor of a bill cosponsored by Senator Debbie Stabenow to crackdown on countries, like China, involved in artificially manipulating their currency.
Senator Stabenow has been a leader in the effort to stop currency manipulation for years, and this is the first action by the full Senate.
"I've been fighting to stop China's illegal action on currency for years, and the fact that the Senate has finally passed this bill is a major victory for our businesses and workers," said Sen. Stabenow. "China's currency manipulation directly translates to lost American jobs and suffering for families, especially in Michigan. Standing up to China to stop their illegal activity creates American jobs and reduces the deficit at the same time."
Currency manipulation, the act of a country purposefully devaluing its own currency, distorts exchange rates, making the manipulating country's goods artificially cheaper while making other nations' goods more expensive. Estimates suggest stopping China's illegal currency manipulation could help spur the creation of up to 1.6 million American jobs, while stopping manipulation in all countries could create as many as 2.25 million.
And ending currency manipulation would also reduce the deficit-the nonpartisan Congressional Budget Office reports that initial duties collected from Stabenow's plan to stop manipulation would save $65 million. However by creating new economic activity and jobs, some estimates suggest total deficit reduction would ultimately be in the hundreds of billions of dollars.
The legislation now goes to the U.S. House.
Senator Stabenow recently unveiled her American Competitiveness Plan across Michigan, in Detroit, Flint, and Lansing, with local business leaders in those communities that support the legislation.
Stabenow, a member of the President's Export Council under both Presidents Bush and Obama, said that Michigan exports are on the rise and are a bright spot in Michigan's economy. Last year, Michigan exported over $44 billion worth of goods and services-a 37% increase over 2009. Michigan is now the 8th largest exporting state in the country. As the Chairwoman of the Senate Agriculture Committee, Stabenow specifically noted that Michigan agricultural exports increased by 50% between 2004 and 2009. Stabenow said given the promise increased exports have for our state's economy, getting tough on other countries who cheat international trade laws is especially important for Michigan.
Stabenow's American Competitiveness Plan consists of three parts:
* Cracking down on currency manipulation: China and several other countries illegally and intentionally devalue their currency in relation to the dollar to make their own goods artificially cheaper. By some estimates, China's goods may be up to 40% cheaper than American goods solely because of China's currency manipulation-meaning a product made in Michigan may cost $100, while a Chinese product made of the same materials and produced in the exact same way would cost $60. The Stabenow-cosponsored currency bill that passed tonight would require the U.S. government to act to stop currency manipulation through the World Trade Organization and level the playing field by putting duties on the goods of countries that break the rules to offset the effects of manipulation.
* Creating a trade prosecutor to hold other countries accountable: Other countries abuse international trade law at the expense of American businesses and too often face no retribution. In fact, former Secretary of Commerce Mickey Kantor testified at a recent Finance Committee hearing that the U.S. has the smallest trade enforcement office of any industrialized country, despite having entered into more than 300 trade agreements. Senator Stabenow's Competitiveness Plan would create a trade prosecutor whose sole responsibility would be to identify ways that other countries are breaking international trade law and bring them to justice.
* Stopping the theft of American ideas and technologies: Foreign companies constantly violate international intellectual property laws, engaging in the outright theft of American entrepreneurs' ideas and our country's cutting edge technologies. Senator Stabenow's American Competitiveness Plan contains a number of measures to attack intellectual property theft. The first provision is a new "three strikes and you're out" law for foreign importers of counterfeit goods -a violator would get fined on the first offense, banned from doing business in America for one year after the 2nd offense, and if a violator gets caught three times-they will never be allowed to do business in the United States ever again. Other provisions include new fines for violators, the creation of a "watch list" to alert customs and border security about shipments from those suspected of breaking the law and more resources for customs agents to focus on intellectual property theft.