Sen. Brown, Schumer Urge Sec. Locke to Act on Chinese Currency Manipulation Paper Case

Letter Calls for Investigation into the Undervalued Chinese Currency which Harms American Paper Producers

WASHINGTON, D.C. -U.S. Sens. Sherrod Brown (D-OH) and Charles E. Schumer (D-NY) urged the U.S. Department of Commerce to move forward with an investigation of China's currency manipulation and its effect on the U.S. paper industry.  In a letter sent to Commerce Secretary Gary Locke, the Senators called for the Department to make a final ruling on whether or not it would investigate whether China's currency policy provides an unfair subsidy for Chinese paper products that should be remedied through trade measures.

"We cannot allow Chinese currency manipulation to undermine our economic growth and shutter our factories," said Sen. Brown.  "China's currency manipulation enables Chinese paper producers to undersell U.S. companies, including Appleton in West Carrolton and NewPage in Miamisburg. As a result, paper workers have lost jobs and communities have been forced to deal with plant closures. I urge the Commerce Department to initiate an investigation into China's currency practices."

"China's mercantilist policies continue to undermine the health of many U.S. industries ­that inject billions of dollars into the U.S. economy and employ hundreds of thousands of American workers. We cannot allow paper companies in New York and across the country to become the latest victims of our failure to confront China's currency manipulation. The Commerce Department ought to carry out its responsibility and pursue this investigation into China's failure to play the rules," Schumer said.

On Sep. 23, 2009, NewPage Corporation in Miamisburg, Appleton Coated in West Carrolton, and Sappi Fine Paper North America, along with the United Steelworkers, filed a countervailing duty petition with the Department of Commerce covering certain coated paper from China. On Feb. 26, 2010, Schumer, Brown, and a bipartisan group of 14 other senators sent a letter to Commerce Secretary Locke urging him to initiate an investigation. On March 2, the Department of Commerce announced its preliminary determination in the coated paper countervailing duty case but did not act on the U.S. producers' allegation that China's undervalued currency provided an unfair subsidy to Chinese producers. The Department indicated that it needed more time to review the allegation.  While the Department of Commerce delays its decision, American jobs are being lost.  NewPage Corporation and Appleton Coated have been forced to lay off workers, close facilities, and take temporary shut-downs as a result of China's unfair trade practices. 

The Commerce Department investigates unfair trade practices, including subsidization of products exported to the U.S.  If the Commerce Department determines that imported products are unduly subsidized - and the International Trade Commission (ITC) finds that the U.S. industry has suffered from the subsidized imports - Commerce will assign additional import taxes to those products.

In October 2008, Brown testified before the ITC on the effect of subsidized imports on Appleton Papers of West Carrolton, Ohio. Later that month, following Brown's testimony, the ITC ruled that imports of lightweight thermal paper (LWTP) from China and Germany have injured the U.S. industry. The ruling opened the door for duties to be imposed on imports for three years, which would help domestic paper producers like Appleton Papers.

In March 2010, Sens. Schumer introduced and Brown cosponsored bipartisan legislation that would amend the Exchange Rates and International Economic Policy Coordination Act of 1988 to clarify the definition of manipulation with respect to currency, reduce the global account surplus requirement necessary for the United States to take action (only requires bilateral account surplus), and establish additional reporting guidelines for Treasury to include in their bi-annual reports to Congress.

Brown is the Chair of the Senate Banking Subcommittee on Economic Policy and one of Congress' leading voices on trade. Earlier this year, Brown was appointed to the President's Export Council, the principal national advisory committee on international trade. In October 2009, Sen. Brown introduced the Trade Enforcement Priorities Act of 2009. The legislation would give the federal government more authority to address trade barriers that undermine American workers and domestic manufacturing.

A full copy of the letter can be found below.

The Honorable Gary Locke

Secretary

U.S. Department of Commerce

1401 Constitution Avenue, NW

Washington, DC 20230

 

Dear Secretary Locke:

We are writing to express our concern over the Department of Commerce's delay of its decision regarding whether to investigate China's currency manipulation in the coated paper from China countervailing duty investigation. 

On September 23, 2009, NewPage Corporation, Appleton Coated, and Sappi Fine Paper North America, along with the United Steelworkers, filed with the Department of Commerce a countervailing duty petition covering certain coated paper from China.  The petition alleged that Chinese producers and exporters of coated paper benefit from various large government subsidies, as well as tax incentives and subsidized loans.  Among the most harmful of the government subsidies is China's massive undervaluation of its currency, the renminbi, which is estimated to be undervalued by as much as 40 percent. In January of this year, this allegation was enhanced to cover specificity issues, and an economic study was submitted to show that currency undervaluation disproportionately benefits exporters of manufactured goods from China.

On March 2, the Department of Commerce announced its preliminary determination in the coated paper countervailing duty case but did not act on the U.S. producers' subsidy allegation covering China's undervalued currency, stating that it needed more time to review the allegation.  This was three months ago and we understand the Department of Commerce still has not made its decision. A similar allegation has been filed in the Aluminum Extrusions countervailing duty case, and has not been acted on. This also affects producers in my state and causes job losses.

While the Department of Commerce delays its decision, American jobs are being lost.  NewPage Corporation, headquartered in Ohio, and Appleton Coated have been forced to lay off workers, close facilities, and take temporary shut downs as a result of China's unfair trade practices.  The U.S. paper producers' allegation merely seeks for China's currency practices to be examined; the implementation of duties based on China's currency undervaluation would only be determined at the end of a thorough investigation by Commerce officials.  With the final determination in the coated paper case due in September of this year, time is running short. 

 From all reports, the progress on currency issues in the U.S.-China Strategic and Economic Dialogue appears very limited, but even if there was any progress this would not affect the necessity of beginning CVD investigations on this issue.  Despite the nearly unanimous agreement that the renminbi is significantly undervalued with respect to the dollar and that it results in a competitive advantage for Chinese exporters and undercuts the U. S. job base no action has been taken against this distortive and harmful trade practice.

In order to achieve the President's worthy goal to double U.S. exports in five years,  the U.S. must do everything it can to enforce the trade laws.  The time for delay is over.  We owe it to our paper companies and their workers to use the tools at our disposal to ensure that trade is conducted on a fair basis, free of dumping and huge government subsidies.  We would appreciate your swift attention on this matter.

 

                                                            Sincerely,

 

            Sherrod Brown                                                Charles E. Schumer

            United States Senator                                      United States Senator

 

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