Foreign Affairs Authorization Act, Fiscal Years 2006 and 2007

By:  Lindsey Graham
Date: April 6, 2005
Location: Washington, DC


FOREIGN AFFAIRS AUTHORIZATION ACT, FISCAL YEARS 2006 and 2007

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Mr. GRAHAM. Mr. President, first, I acknowledge that it has been a pleasure to work with Senator Schumer and others to develop this amendment. We have been involved in this effort for 2 years. We come from different ends of the political spectrum on many issues, but we found common ground here because we hear the comments, whether it is in South Carolina or New York, from manufacturing entities and other business people basically saying China has a business relationship that we cannot compete with. The political dynamic here is real.

Senator Lugar explained how this amendment affects this bill. I want to let him know I totally understand that. We are now basically running out of options. As Senator Schumer said, whether this amendment becomes law is probably not the point. The point is that the Chinese need to understand where the Senate and House stand. The President spoke numerous times about trying to get China to change the value of the currency. Secretary Snow has been to China and brought up this topic. There has been a begrudging movement in words but none in deeds. Talk is literally cheap with the Chinese. Their money is cheaper and it is having an effect on our economy and world relationships that need to be met with decisive political action, because the truth is, for the last decade we have had a very mixed message when it comes to China--both Republicans and Democrats. The only thing the Chinese understand is resolve. The one thing this country has had, when it comes to China in terms of trade, is the lack of resolve.

No one is advocating building a wall around our country. China presents a great opportunity for American business. What we are advocating is allowing China to become part of the world community under the same set of rules we all abide by. They are missing the mark by miles. The money they are making off these trade agreements, where they cheat, is not going into the hands of the everyday Chinese worker; it is going into their military. If we had the same approach during the Soviet Union era by having trade deals with the Soviet Union that would be constantly violated, enriching the government, the Soviet Union would never have collapsed.

China's Communist government is taking the benefit of these trade deals and enriching their military and growing in economic and military strength in the way that I think hampers freedom. It doesn't help spread it. Here are the facts. Since March, 2002, the U.S. dollar has fallen 30 percent against the euro. You know what that has done against the yuan? Not one change. Thirty percent against the euro, but no change against the yuan. They always create an advantage. When we passed normal trading relations with China in 2001, the trade deficit was $100 billion; today it is $160 billion--a 60-percent increase of a trade imbalance since PNTR was passed.

Now, is our market access improving? There is a 5-percent increase of American goods going to China. If you don't believe me and Senator Schumer, and you think we are advocating a protectionist philosophy that is antiquated and outdated in the 21st century, maybe you will believe the U.S.-China Commission, which was authorized and empowered by the Congress, the Senate and the House, to investigate China's business dealings, their trade policies.

I ask unanimous consent to have this document printed in the RECORD.

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Mr. GRAHAM. What do they tell us? There was a general consensus among the witnesses--they held 2 days of hearings--that China remains in violation of its WTO obligations in a number of areas impacting vital U.S. economic interests:

It has become increasingly clear that China is not meeting key commitments it made when joining the WTO and that our trade laws have to date been insufficient in addressing these problems.

They lay out the problems: China currency manipulation, intellectual property theft; treating China as a nonmarket economy; lack of enforcement of U.S. trade remedies that are on the books; China subsidies to businesses that are in violation to WTO.

We have had a very tepid response to China's cheating across the board and we are paying a huge price. Many Americans are losing jobs not because they are being outworked, or because the Chinese are smarter, but because they are being cheated out of their jobs. One way is that the Chinese have taken the value of their currency and artificially suppressed it, creating a discount on every product coming out of China to the detriment of American manufacturing and the world community at large, and all we do is talk to China.

A lot of people are depending on us to do something about China in a constructive fashion. Is this the best way to have done it? No. This is the only way I know of, after 2 years, to get anybody's attention, our attention or China's attention. We passed a sense-of-the-Senate resolution in 2003 that was a compromise that Senator Schumer and I made. OK, let's get the Senate on record. It was a sense of the Senate, and no one objected that China is manipulating its currency in violation of international norms and it costs Americans jobs. That was 2 years ago.

Last year, we were going to put it on the FSC/ETI bill. Everybody said you are going to mess up the bill. So we had a colloquy with Senator Grassley, who is a good friend, and we talked about holding hearings and we talked about engaging China anew, because we didn't want to mess up the bill by bringing this bill forward. That was over a year ago. Not one thing has changed--not one hearing--and the problem gets worse and worse. The balance of trade between us and China is absolutely shameful. We are doing nothing about it other than talking.

Well, this amendment does something about it other than talking. Let me tell you what the U.S.-China Commission said about currency manipulation.

The commission recommends that Congress pursue the following measures to move China toward a significant near-term upward reevaluation of the yuan by at least 25 percent.

We look moderate compared to the United States-China Economic Security Review Commission.

Consider imposing an immediate, across-the-board tariff on Chinese imports unless China significantly strengthens the value of its currency against the dollar or against a basket of currencies.

The experts tell us the yuan is 15 to 40 percent below its true market, causing havoc on American manufacturing.

Reduce the ability of the Treasury Department to use technical definitions to avoid classifying China as a currency manipulator. .....

They have a list things for us to do. One is imposing an across-the-board tariff. What I and Senators Schumer, Bunning, and others are suggesting we do is put China on notice: In the next 6 months, allow China to move toward reevaluation in a way that will help the American economy, will make China a true, fair member of nations, and if they do not act in the next 6 months in some significant way, then we will look at the ability of this country to protect ourselves against a Communist dictatorship that cheats. And if the Senate is not here to protect the American worker against a Communist dictatorship that cheats, what the heck are we here for?

I hope we will send a message to China they can understand because apparently they do not understand what we are saying any other way.

I have enjoyed this experience working in a bipartisan fashion to stand up for American business interests that are being cheated out of jobs because of a Communist dictatorship that cheats and is building up their military at our expense.

To the American manufacturing community, there are a million other ways we can help. I talked with Governor Engler today. We are going to do more domestically and internationally to level the playing field, but this is a significant start. Will it solve all the problems? No. Will this put China on notice as they have never been put on notice before? Yes. And if we fail to adopt this message, we are also sending a message to China. I am not sure that is a message the American worker can stand having sent to China.

I yield the floor.

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