President Obama, speaking to a CNBC town hall on the economy today,
China ‘s currency is valued lower than market conditions would say it should be. That means they can sell stuff cheaper here, and our stuff, when we try to sell there, is more expensive. So it gives them an advantage in trade. What we’ve said to them is you need to let your currency rise in accordance to the fact that your economy is rising, you;re getting wealthier, there should be an adjustment there based on market conditions. They have said yes in theory, but in fact they have not done everything that needs to be done. We are going to continue to insist that on this issue and on all trade issues between us that it’s a two way street. …
It’s got to be fair, you can’t just sell to us and we can’t sell to you. And so we have been bringing more actions against China before the World Trade Organization. We are going to enforce our trade laws more effectively than we have in the past. … I just want to make sure that trade is good for American businesses and American workers, and over the last several years it hasn’t always been.
Watch it here:
Lesson: The President needs Congress’ help to put pressure on China to bring their currency to market rates.
In the House the Murphy-Ryan Currency Reform Fair Trade Act (H.R. 2378), similar to the Graham-Schumer urrency Exchange Rate Oversight Reform Act of 2010 (S.3134) in the Senate, sets up a formal, transparent mechanism for identifying currency manipulation and a process of steps leading up to tariffs to address the problem. Both the House and Senate should show China that the US is serious about this by acting on these bills. This will put the wind at the back of Obama’s negotiators, giving China serious incentive to bring their currency to market levels and bring their other trade practices into compliance with treaties now.