Sen. Brown Testifies Before U.S.-China Economic and Security Review Commission on Trade

WASHINGTON, D.C. - U.S. Sen. Sherrod Brown (D-OH) testified before the U.S.-China Economic and Security Review Commission today at a hearing entitled "China and the WTO."

Brown outlined how Chinese trade relations have undermined American manufacturing and Ohio jobs. Considered one of Congress' leading voices on fair trade, Brown called for enhanced trade enforcement authority, including "Super 301" authority and penalties for currency manipulation. He also argued that trade enforcement is critical to promoting clean energy production in the U.S.

Brown, along with U.S. Sen. Debbie Stabenow (D-MI), introduced the Trade Enforcement Priorities Act, legislation that would give the federal government more authority to address trade barriers that undermine American workers and domestic manufacturing. This includes the reinstatement of "Super 301" authority, which allows the U.S. Trade Representative to enforce trade laws that promote domestic manufacturing and job creation.

In March 2010, Brown joined Sen. Schumer and 14 other Senate colleagues to introduce 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.

A full copy of Brown's statement from today's hearing can be found below:

Thank you, Commissioners Slane and Mulloy. I applaud the Commission for holding this hearing today. This Commission was established ten years ago when Congress passed Permanent Normal Trade Relations with China- at a time when  our nation entered the 21^st Century facing great economic opportunities and confronting gathering national security threats.

Many in this room can recall the enthusiasm with which proponents heralded China PNTR's passage through Congress. I served in the House at this time, and recall that every member of Congress was told - repeatedly in newspaper ads and editorials, and in hundreds of lobby visits - how 1.2 billion Chinese consumers would purchase goods from their states.

Free trade advocates - in Washington, on Wall Street, and on nearly every editorial board- lauded the economic opportunities yet to come for U.S. workers and businesses. They argued that granting PNTR to China was the best way to promote reform and stability in China and the region. America's corporate leaders helped convince Congress to give financial incentives to a nation in return for the false promise that a repressive regime would no longer limit individual freedom or crack down on independent labor unions.

But today - just ten years later - those proponents have been proven wrong. Since receiving PNTR status and the benefits of WTO membership, China has taken money from American consumers and investors without fully opening its markets to American businesses and workers. The results are record trade deficits and millions of jobs lost in Ohio and across the U.S.  And as for the impact on Chinese workers - they continue to face low wages and substandard labor conditions.

And it's my guess that even the most ardent proponents of China PNTR are feeling a bit of "buyer's remorse," finding themselves unable to do business in China because of China's aggressive protection of industries. While I have concerns about the WTO's scope, I believe we do need a multilateral, rules-based system that holds members accountable.

A critical way to ensure accountability and advance our economic interests is strong and aggressive trade enforcement. There are several trade enforcement initiatives the Obama Administration must take to rebalance our trade relationship with China and to defend our interests.

On March 31, Ambassador Kirk released the National Trade Estimate report, a report required by statute to describe the barriers to trade American workers and businesses face. Earlier this year, I introduced legislation to revive the "Super 301" mechanism that requires the Administration to use the National Trade Estimates Report to establish enforcement priorities for opening foreign markets for U.S. exporters.

"Super 301" was renewed by executive order in the Clinton Administration.  But it lapsed under the George W. Bush Administration and is no longer in effect. I call today on the Obama Administration to revive "Super 301" as a critical piece of the National Export Initiative to double exports within the next five years.

In addition to reviving Super 301, there are two other areas where the Obama Administration should modify our trade relationship with China.

First, China's systemic intervention in the currency market has led to the undervaluation of the yuan (or renminbi) by up to 40 percent. This currency manipulation imposes an enormous and unfair competitive disadvantage for workers and manufacturers in Ohio and contributes to our country's staggering trade deficit with China. Economists across the board recognize these indisputable facts.

Senators Graham, Schumer, Stabenow, and I are calling for a vote on our legislation that addresses this disadvantage. Our bill would require the Commerce Department to investigate currency undervaluation as a subsidy if Treasury designates a currency as fundamentally misaligned. If a country fails to act, our bill requires penalties that get harsher as time goes on.

Second, we need strong trade enforcement to ensure a strong U.S. presence in the global clean energy economy. We can all agree on the need for a clean energy future in the United States, one that fosters energy independence.

Yet, China is making sure that it leads the world in clean energy manufacturing - at any cost and by any means necessary.  Beijing invested $34.6 billion in renewable energy last year, nearly double U.S. spending of $18.6 billion. Every day we delay investments in clean energy we import 11.7 million barrels of oil - allowing Iran to earn $173 million a day. Every day we delay investments in clean energy, China spends $51 million a day to speed right past us in the race to lead the world in clean energy manufacturing.

If China leads the clean energy revolution, we will trade dependence on foreign oil with dependence on Chinese or foreign clean energy technologies. But with the right investments and strong trade enforcement, we can make sure that doesn't happen.

Across Ohio, public-private partnerships between universities, businesses, and workforce boards are laying the groundwork to turn Ohio into the Silicon Valley of Clean Energy Manufacturing.

But as we access the power that can be generated right here in America - right in Ohio - we need to be playing on a level playing field.  Right now, China is not only using its abundance of capital to monopolize clean energy manufacturing, but it's also elbowing competition out of the way by discriminating against U.S. companies. China's so-called "indigenous innovation "policies provide preferences to products containing Chinese-developed intellectual property (IP) for government procurement purposes.

We make similar policy choices, such as "Buy America," but the U.S. is also a signatory to the WTO's Government Procurement Agreement. When we write Buy America provisions into spending bills, we make them consistent with the WTO. China cries foul at our Buy America policies, but has its own "Buy China" policies - without signing onto the WTO agreement on procurement.

That's why I encourage the Obama Administration to launch a Section 301 case against China's package of policies that limit market access to U.S. companies in the clean energy sector.

Consider what is at stake. Five of the top 10 solar panel makers in the world are from China. But number one is First Solar, a U.S. company which has factories around the world that can produce as much energy as any coal or nuclear plant, but much cleaner and more efficient. One of First Solar's factories is in Perrysburg, Ohio - and the entrepreneurs behind the company's success started out at the University of Toledo. If we want to keep First Solar at the top first in the world and if we want our entrepreneurs to continue to lead the world in innovation, they should have access to all of the world's markets.

But right now China closes its doors while cornering the market on wind and solar power products and technologies. That's why we need vigorous trade enforcement. Just the launch of a "301" case by this Administration will show China that we are serious about competing in this emerging market.

We cannot enter the next decade of the 21^st Century further behind, facing the same hurdles that faced our nation just ten years ago. We must take the buyer's remorse of those who supported China PNTR and ensure we begin the next decade with a rules-based trading system that works better for American workers and businesses.

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