WTO Meeting on Currency Manipulation Issues
The World Trade Organization (WTO) has convened a meeting in Geneva, Switzerland to discuss the ramifications of currency policy on trading relationships. WTO Director-General Pascal Lamy has asked countries to examine the subject in a rational way, and to avoid finger-pointing. However, when examining the situation, the only rational response is finger-pointing: some countries purposefully devalue their currency in violation of WTO rules, and others do not. Devaluation by countries such as China has hurt the U.S. economy immensely over the years, and there is no reason to pretend otherwise.
The U.S. trade gap with China was $295 billion last year. This unprecedented deficit is the result of a multitude of factors, but China’s purposefully undervalued currency is a big part of the problem. A Bloomberg study predicts that the U.S. could halve this trade deficit by 2014 if China would end its currency manipulation practices. Chinese leaders deny that such a valuation would fix the economic problems in the U.S., but it would certainly help.
China’s currency is thought to be undervalued by as much as 40 percent, giving a huge advantage to Chinese exporters while making American goods relatively more expensive. This has been part of the reason China has never become the market for American exports that was promised when the Chinese signed onto the WTO charter in 2001. The U.S. did not join the WTO for China’s benefit, and we should not be having a discussion where we avoid pointing fingers when the culprit is so clear.
The United States needs to do what is best for its own people, and by allowing the WTO to dictate terms of trade we are failing our citizens. We are supposed to have a rational discussion while Chinese companies put Americans out of business and out of work. The WTO demands that we keep our borders open to Chinese goods, despite the fact that China is openly flaunting the rules.
We need not fault China for manipulating their currency. They are a sovereign nation and can do what they like. We should fault our own leaders for continuing to pursue trade through the WTO with countries who refuse to play by the rules.
We should also be exercising our right to counter China’s currency manipulation. A bill has passed the Senate, but Republican leaders in the House refuse to bring it to a vote because they fear a trade war. This is nonsense, and the American people should demand that we stop being polite and start standing up for our economy and our jobs.