Ahead of the U.S.-China Strategic & Economic Dialogue (S&ED) meetings in Beijing this week, U.S. Senator Olympia J. Snowe (R-Maine) joined her fellow Republicans on the Senate Finance Committee in writing to Obama administration officials to highlight their shared economic priorities during the discussions. In their letter to Secretaries Timothy Geithner, Hillary Clinton, John Bryson, and Ambassador Ron Kirk, the Senators emphasized several key matters, including pressing China on manipulation of its currency, as well as protecting intellectual property rights for American individuals and companies.
Joining Sen. Snowe on the letter are Senators Orrin Hatch (R-Utah), Chuck Grassley (R-Iowa), Jon Kyl (R-Ariz.), John Thune (R-S.D.), John Cornyn (R-Texas), Mike Enzi (R-Wyo.), Pat Roberts (R-Kan.), and Mike Crapo (R-Idaho).
"It is critical that negotiators understand the importance of setting a new path that will anchor the U.S.-China economic relationship upon a level commercial playing field, a commitment to play by the rules, and a rebalancing of trade and investment between our two nations," Senator Snowe said. "I am pleased to join with my colleagues on the Senate Finance Committee in reinforcing the necessity of holding our foreign competitors accountable when they violate our trade rules. Indeed, since Congress first began requiring the Treasury to analyze the exchange rate policies of foreign countries in 1988, China has been cited as a currency manipulator five times -- all occurring between 1992 and 1994. For more than a decade, China has manipulated its exchange rate by pegging the Chinese renminbi to the dollar. As a result, China's currency is estimated to be undervalued by anywhere from 12 to 50 percent.
"Furthermore, the theft of American intellectual property in China continues unabated and is unacceptable," Senator Snowe wrote in the letter with her colleagues. "We cannot allow China -- or any country -- to steal the value of our intellectual property for their own gain, or we risk losing our greatest advantage in the global marketplace. China's protection of intellectual property must be measured by the results on the ground, not by the rhetorical or institutional commitments of the Chinese government. Until China demonstrates its commitment to protecting intellectual property rights in this way, the issue will continue to create substantial strain in our economic relationship."
BACKGROUND: In 2011, Senator Snowe joined Senator Sherrod Brown (D-Ohio) in introducing the Currency Reform for Fair Trade Act of 2011 (S.328), legislation that will give the government additional tools to address China's currency manipulation. The key elements of S. 328 are included in the Currency Exchange Rate Oversight Reform Act (S.1619), which passed the United States Senate by a vote of 63-35 on October 11, 2011.
Senator Snowe has also introduced the Currency Exchange Rate Transparency Act (S. 1238), with Senator Jay Rockefeller (D-West Virginia) to level the playing field for American workers by requiring the President to certify when sending a trade agreement to Congress that the government of the country the trade agreement is with has not manipulated its currency in the last ten years. Under the bill, this certification would be a precondition for consideration of any bill implementing a trade agreement or extending normal trade relations to another country.
Furthermore, Senator Snowe has worked in Congress and with the Administration to enforce World Trade Organization (WTO) rules and address China's currency exchange rate manipulation. In September of 2010, Snowe testified before the International Trade Commission and made the case that foreign manufacturers in China were illegally selling their products in the U.S. at unfairly subsidized rates. Amazingly, however, the Commerce Department has refused to investigate.
A recent report estimates that revaluation of the Chinese yuan to its equilibrium level could lead to significant benefits for the American economy, including increasing U.S. GDP by as much as $285.7 billion, increasing U.S. employment by 1.6 percent, and decreasing the U.S. budget deficit by up to $71.4 billion per year.