WASHINGTON, D.C. - With today's release of new trade deficit figures showing an $18.3 billion increase last month in our trade deficit with China, U.S. Sen. Sherrod Brown (D-OH) today wrote to U.S. Treasury Secretary Timothy Geithner urging him to designate China as a currency manipulator. Brown argued that the artificial devaluation of the Chinese currency has damaged the American manufacturing industry.

"In the face of China's inaction, it is clear that the United States must move to ensure a level playing field on behalf of the workers and businesses disadvantaged by this inequitable, mercantilist trade policy," wrote Sen. Brown. "Despite research of leading economists that ranks China among the most egregious currency manipulators, Treasury has consistently failed to recognize that country as such. It is time we acknowledge the facts and move to protect hardworking Americans."

Today, Brown urged Secretary Geithner to designate China as a currency manipulator in the Treasury Department's Semiannual Report on International Economic Exchange Rate Policies. Last month, Brown joined a group of 15 senators that called for a federal investigation into China's currency manipulation and its effect on the U.S. paper industry. The letter, sent to Commerce Secretary Gary Locke, urged him to investigate whether China's currency policy provides an unfair subsidy for Chinese paper products that should be remedied through trade measures.

Brown is the Chair of the Senate Banking Subcommittee on Economic Policy and one of Congress' leading voices on trade. In Nov. 2009, Brown introduced the Trade Reform, Accountability, Development, and Employment (TRADE) Act which would require a review of our trade agreements and set forth principles on labor, the environment, and food and product safety. He also introduced the Trade Enforcement Priorities Act of 2009 and the Reciprocal Market Access Act of 2009 to empower the United States Trade Representative - the president's primary trade negotiator - to confront unfair trade practices of our trading partners.

A full copy of the letter can be found below:


Dear Secretary Geithner:

I write to you today regarding a trade matter central to the long-term economic stability of our nation.

As you are no doubt aware, serious concerns have been raised about China's persistent manipulation of its currency. By valuating the renminbi to the dollar at a fixed exchange rate well below its fair market value, China unfairly subsidizes its exports and hinders foreign imports. American producers simply cannot compete with under-priced Chinese equivalents, thereby exacerbating the severe U.S.-China trade deficit. Furthermore, China's intervention in the market is a violation of its international trade and monetary obligations.

Most economists recognize the extreme adverse effect of China's currency manipulation on the U.S. economy and jobs. In recent congressional testimony, Simon Johnson, MIT economist and member of the Congressional Budget Office's Panel of Economic Advisors, stated that removing the currency intervention would likely result in the natural appreciation of the renminbi in the order of twenty to forty percent. The effective depreciation of the dollar against the renminbi would, in Mr. Johnson's words, "help expand our exports and improve our ability to compete against foreign imports; this would aid the process of recovery, job creation, and broader adjustment in the U.S. economy."

Yet many economists remain skeptical that a substantial change in China's monetary policy will come any time in the near future, even as the Chinese government maintains that the currency peg is only a temporary measure. In the face of China's inaction, it is clear that the United States must move to ensure a level playing field on behalf of the workers and businesses disadvantaged by this inequitable, mercantilist trade policy.

As an initial step, I would urge you to designate China as a currency manipulator in the Department of Treasury's Semiannual Report on International Economic Exchange Rate Policies. Section 3004 of the Omnibus Foreign Trade and Competitiveness Act of 1988 requires Treasury to identify countries judged to be manipulating their currencies to boost exports or make U.S. exports more expensive in overseas markets. A designation of China as a currency manipulator would give much needed certainty to the Administration's commitment to correcting this trade barrier. Despite research of leading economists that ranks China among the most egregious currency manipulators, Treasury has consistently failed to recognize that country as such. It is time we acknowledge the facts and move to protect hardworking Americans.

Given the importance of trade relations between our countries, I understand the desire to avoid potential conflicts with China. But in this instance, the conflict already exists due to China's deliberate currency policy. The severe economic downturn has underscored the need to promote policies that preserve American jobs and businesses. Addressing China's currency manipulation is a critical step toward rebuilding our economy and safeguarding against future financial crises.

I thank you for your consideration and look forward to your response to these matters.


Sincerely,


Sherrod Brown

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