I write lots of columns, and it’s my belief that a writer has to have a personal interest in order to make an effective argument. But, here’s my dilemma: If a problem that I have written about in the past continues without much change, or by some estimations gets worse, should I forget about it and spare the readers another column about a hopeless cause?
You may not care about my quandary, but consider this: The Chinese Currency Coalition and its Congressional supporters have filed new legislation aiming to compel the federal government to challenge China’s de facto policy of currency manipulation. It’s the second effort in the past 12 months to address this chronic situation, and to its credit the Coalition seems unfazed by their “hopeless cause.”
The Chinese Currency Act of 2005 specifically details that nation’s longstanding policy of pegging its currency to the U.S. dollar. In effect, China undervalues its own currency in order to prolong trade surpluses created by the low wages and price controls it forces on its own workers and consumers. In addition, the proposed legislation identifies how such a policy contradicts China’s international legal obligations within World Trade Organization and the International Monetary Fund not to engage in export subsidization or currency manipulation.
The Coalition teams industry, agriculture, and labor organizations, and some elected officials. But, a remarkable — and still, often un-remarked — aspect of this saga is the apparent lack of concern by federal authorities to find any solution for the loss of jobs, the climbing trade deficit, and the wallowing exchange rate that are the result of China’s policy. By extension, it’s remarkable how little impact “politics” seems to have on the matter. The coalition is no obvious alliance of Democrats with labor or Republicans with business. Their motivation is the cause itself, and perhaps the frustration that so few share their concerns.
Last fall, the Coalition took its agenda to the Commerce Dept. via a Section 301 petition, a provision that grants the U.S. Trade Representative broad authority to take various countermeasures against foreign practices that unfairly impact U.S. trade. The petition was turned down almost immediately.
At that time, the USTR said the administration had “serious concerns” about China’s currency rate policy, but that it believed engagement, not trade petitions, would resolve the issue. With the current proposal, U.S. Treasury Secretary John Snow called legislative efforts to penalize China “a bad mistake.”
So, the policy of the federal government is effectively the same as the WTO’s and IMF’s: to look away from the specific violations and broader injustices and let market forces prevail. If China had any regard for free markets, this might be a respectable approach. Forgers may not be following China’s actions in specific legal detail, but they know the effect: Low-cost forgings that producers here cannot match on price, notwithstanding the quality or logistical advantages they may offer potential customers.
That’s the concern driving the Coalition. It’s my concern, too. And, along with the economic damage, and official indifference, I’m troubled by the injustice done to many millions of Chinese trapped in a planned economy with no civil or property rights to protect them. These are the reasons this subject doesn’t go away.