Ohio businesses, we were told, would gain new access to Chinese markets through the removal of trade barriers, increased transparency, and more stringent protection of intellectual property rights. China promised to follow the rule of law and to reform its legal system, and, in turn, would gain new access to global markets.
Ten years later, Ohio workers have seen thousands of jobs shipped to China — factories in Ohio have moved to Wuhan and Shenzhen, with the final products sold back to the U.S. American manufacturers have been undermined by a flood of cheap Chinese imports priced artificially low. Chinese citizens face poor work conditions and continual human rights violations — and the country’s sole Nobel Peace Prize winner is languishing in prison.
The big winner? The multinational corporations that have offshored jobs and the Chinese communist government and the apparatchiks they have enriched.
Gaming the system
And while Ohio companies and workers are following World Trade Organization rules — intended to provide a common set of law to ensure a level playing field for global trade — the Chinese are gaming the system.
The list of China’s WTO violations is long. Estimated losses due to intellectual property theft from U.S. firms approaches $50 billion, with those same firms reporting that better enforcement could lead to almost one million American jobs. Chinese authorities continue to stall on transparency, heavily subsidize exports, and hoard rare earth materials needed for advanced manufacturing. We examined these issues at a hearing I chaired last week on China’s broken WTO promises as part of the Congressional-Executive Commission on China.
The most damaging of China’s WTO violations is its continual manipulation of its currency. By deliberately holding down the value of its currency to boost exports, China has not only violated WTO commitments, but has built the largest trading surplus in history to the detriment of the U.S. and other trading partners.
The Senate fought back this fall by passing the Currency Exchange Rate Oversight Reform Act, legislation I authored with a bipartisan group of senators that includes Senators Olympia Snowe, R-Maine; Charles Schumer, D-N.Y.; Lindsey Graham, R-S.C., and Jeff Sessions, R-Ala. The bill, which would crack down on Chinese currency manipulation, provided an opportunity for Democrats and Republicans to come together to put American jobs and American workers first. It also represented the largest bipartisan jobs bill passed this session of Congress.
Currency manipulation provides an unfair subsidy to Chinese exports — of up to 40 percent, according to most economists. Economist C. Fred Bergsten of the Peterson Institute for International Economics has asserted that China’s intervention is the most protectionist policy of any major country since World War II.
Additionally, Ohio manufacturers seeking to sell their products to China — our nation’s fastest growing export market — are hit with the same percentage in what amounts to an unfair tariff. A report released this fall estimates that our trade deficit with China, exacerbated by Chinese currency manipulation, has caused the loss of more than 2.8 million American jobs in the past ten years — with two-thirds of the lost jobs in the manufacturing industry.
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