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Panel 1 Of A Hearing Of The Trade Subcommittee Of The House Ways And Means Committee: Trade With China, Currency, Food Safety


Location: Washington, DC

Panel 1 Of A Hearing Of The Trade Subcommittee Of The House Ways And Means Committee: Trade With China, Currency, Food Safety

SEN. STABENOW: Well, thank you, Mr. Chairman, to all the committee members.

It's wonderful to see you and I very appreciate the opportunity to talk with you today about something that I know, Mr. Chairman, you have been involved with -- issues like currency manipulation long before we knew what the phrase was. So I thank you very much, and I'm very pleased also that Congressman Bart Stupak, Congressman Joe Knollenberg are here. We care deeply at the Michigan Delegation without regard to partisanship about what is happening to our great state -- the people, the jobs, the businesses. And we come together, I know, with one voice. I also want to thank Congressman Hunter and Congressman Ryan for introducing very important legislation related to countervailing duties. I'm pleased to join in a bipartisan basis with Senator Jim Bunning to introduce that bill in the Senate and we are hopeful that working together, we will be able to make that a part of comprehensive legislation related to currency manipulation.

In the Senate -- as a member of the Senate Finance Committee, I'm the one member that represents the manufacturing Midwest. So I feel a particular responsibility to speak to what is happening to manufacturing in our state and in the country, and I am particularly concerned today. I appreciate being asked to speak about currency manipulation not just with China -- although we certainly speak of China, and for good reason. But I also must add to that Japan and other countries that are doing the same. And in fact, Japan -- as it relates to the auto industry -- as the chairman knows -- is a serious, serious issue.

Michigan has lost one-quarter of our manufacturing work force -- over 250,000 good-paying jobs -- middle-class jobs -- and we have seen our unemployment rate go from 3.7 percent to 7.2 percent -- an alarming rate, the highest in the country and we know that this is part of what is happening nationally, where we have lost over three million manufacturing jobs nationwide, and the real median wage has actually decreased. And I know that trade is not the only issue. We know that, Mr. Chairman. We know there are other challenges -- addressing health care costs and investing in education and innovation -- but it's an irrefutable fact that trade violations are a very big, negative impact on manufacturing and of -- costing us jobs.

And I know we have had for years this debate about open trade versus protectionism. But I think that's a very old debate, Mr. Chairman. I think we're well beyond that. My cell phone, my Blackberry, my computer can jump any wall anyone would put up. The issue is front of us is whether or not we're going to have level -- a level playing field and whether or not we in the United States will be smart about what we do in this global economy to make sure our businesses have an equal chance. And we all know that if they do, they will compete and they will win. We know that countries like China and Japan are cheating, creating artificially low prices for their goods by manipulating currency as well as other unfair trade practices. And in real world terms, it's simple. The same good made with the same materials will cost up to 40 percent less when made in China solely because of currency misalignment. That is wrong.

The choice many business people confront is either to lay off workers in the United States or move the production to China or other offending countries to neutralize the price disadvantage and neither one of those is good for America. Either way, our economy loses.

Last week, the Senate Finance Committee approved a bill that's a step in the right direction and I urge your consideration as it comes to you. And I want to commend Senator Baucus, Senator Grassley, Senator Schumer, Senator Lindsey Graham for working together on that bill.

The bill's most important provisions allow the International Trade Commission to factor in currency misalignment when calculating antidumping cases. I think this is a very important step, but I also believe we can do more. I believe we must provide the additional tool of countervailing duties which go directly after the subsidies foreign governments provide their exporters. By making currency misalignment a countervailing duty subsidy, we will put pressure on governments like China and Japan to change their policies. Having both antidumping and countervailing duties I believe is important. Not only because countries have misaligned currencies, but because they could maneuver around just one remedy possibly. They also need to know that countervailing duties is an option because for some businesses, that may be their only option. In fact, once a country's currency has been shown to be misaligned, and used as an illegal subsidy, which it is, these facts can be easily applied to multiple cases, which also addresses reducing the cost for other business. Saves times and saves money both of which our companies need.

Additionally, if currency manipulation is deemed an illegal subsidy, there is no easy way for countries to escape the penalties. It's not enough however just to have these remedies on the books as we know. Time and time again the administration has waived penalties. As a former member of the Senate Banking Committee, I listened to the treasury secretary repeatedly refuse to say the obvious, that China manipulates its currency. Therefore, we must limit the administration's discretion when it takes time to action -- to take action.

Finally, I'd like to address two frequent criticism of including both anti-dumping and countervailing duties in the same bill or companion bills.

First, there's a debate about WTO compliance of countervailing duties. Frankly, no one knows, no one knows how the WTO will rule. But as you'll hear from members of the third panel, there are many experts who believe countervailing duties are consistent with our WTO obligations. There's also no reason to believe that the U.S. would have to strike both remedies if one of the remedies was ruled as non- compliant. I'm currently working on language that would clarify this issue so that if one action would be ruled out of compliance, the other remedy would remain valid and in tact, and that's eminently doable for us.

Second, some have raised the issue of double counting, that you can't penalize a country for the same action twice. I believe this argument is flawed. Under U.S. law, when both the anti-dumping order and a countervailing duty order are in effect on the same good, the amount of the countervailing duty is added to the exporter's prices that reduces the dumping margin and prevents any double counting.

Mr. Chairman, in summary, by limiting administration discretion and by including both antidumping and countervailing duties in our enforcement toolbox, I believe we will give our effective companies both large and small the necessary tools to fight currency misalignment. And I'm very pleased that both the Senate Finance Committee and the Senate Banking Committee have acted to address this issue, which is a critical jobs issue for us as you know. And I am absolutely convinced that if we work together, we can create the toughest laws possible to support American businesses and American workers. They are looking to us and we own them no less.

I thank you again for giving me the opportunity to share my thoughts.

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