Chesterton Tribune                                                                                   Adv.

USW President Leo Gerard testifies on China's currency exchange rate

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Leo W. Gerard, International President of the United Steelworkers (USW), testified on Wednesday on behalf of the AFL-CIO before a hearing of the Ways and Means Committee of the U.S. House of Representatives on China’s exchange rate.

The hearing was chaired by U.S. Rep. Sandy Levin, D-Mich., who stated: “There is no real question that China’s deliberately undervalued exchange rate is unfair, contributes to global trade imbalances, and cost the U.S. jobs and economic growth, particularly in the manufacturing sector.”

Gerard’s response: “The question now is do we have the will to act to level the playing field and provide the support and assistance that millions of American workers and their communities expect and deserve?”

Gerard added, “Unemployment, underemployment, wage stagnation, foreclosures all paint a grim picture of an economy still struggling to recover.”

Describing the past decade of annual trade deficits with China, Gerard noted that they started from $84 billion in 2001 and have reached $227 billion last year. “This is clearly not the trade profile that the U.S. government predicted as the likely outcome of China’s WTO accession,” he said. “But it is the result of concerted strategic interventions by the Chinese government over many years—and inaction by our own. These trade deficits are unsustainable and require immediate action. What we desire is a mutually respectful, functional and sustainable bilateral economic relationship.”

Gerard maintained further that the Chinese government’s practices amount to as much as a 40 percent subsidy for the products they export to the U.S. It is “a tax on products we try to send there, while siphoning investment dollars vital to keeping the U.S. at the forefront of research and development.,” he said.

Gerard also argued that the GDP growth which comes from the bilateral trade deficit has significantly broader economic implications. “Preliminary estimates from the Economic Policy Institute (EPI) points to as much as a $500 billion reduction in our nation’s federal budget deficit over the next six years from ending China’s currency manipulation,” he said.

“Lost manufacturing jobs lead to lost tax revenue and higher budget deficits that limit our ability to invest in our future,” Gerard said. “This puts substantial pressure on federal, state and local budgets resulting in layoffs of teachers, police and other emergency responders. It doesn’t have to be this way.”

Gerard advocated passage of the Currency Reform for Fair Trade Act of 2010 (H.R. 2378).

 

Posted 9/16/2010

 

 

 

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