PETERS: TRADING PARTNERS MUST PLAY BY THE RULES'09/29/10
FOR IMMEDIATE RELEASE
CONTACT: Alan Mlynek
Wednesday September 29, 2010
Office: (202) 225-5802
PETERS: ‘TRADING PARTNERS MUST PLAY BY THE RULES’
House passes legislation to fight currency manipulation
(Washington, DC) – Representative Peters joined a bipartisan majority of the House of Representatives today in support of new legislation to address currency manipulation. China, Japan, and other nations have taken recent steps to depress the value of their currency in order to make their exports cheaper and make it more difficult for American manufacturers and firms to sell products abroad.
Peters is a co-sponsor of the legislation and has been a vocal critic of unfair trade policies. He led the effort to pressure the Japanese government to revise their ‘Cash for Clunkers’ standards to include American vehicles and favors eliminating tax breaks that reward corporations that ship jobs overseas. He is also gathering support for a letter he will send to the Japanese Finance Minister later this week that calls on Japan to stop intervention in the currency market and play by the same trade rules on currency.
“Michigan workers can out-compete anyone in the world and we cannot allow other countries to tilt the playing field any longer,” said Rep. Peters. “Economists estimate that currency manipulation by China alone has cost hundreds of thousands of American manufacturing jobs and significantly reduced domestic production. The currency manipulation bill sends a clear signal that China, Japan, and others need to play by the same rules as everyone else.”
The Currency Reform for Fair Trade Act gives the U.S. government tools to respond to deliberate currency manipulation by imposing countervailing duties or antidumping measures.
Japan, which accounted for almost $5 billion of the most recently reported monthly U.S. trade deficit, recently intervened in international currency markets for the first time since 2004. By selling yen and buying dollars, Japan has acted to artificially depress the value of the yen. Gary Peters is calling for Japan to refrain from additional intervention and permit the yen to float freely and appreciate as currency markets allow. The letter (below) is expected to be sent by the end of the week.
The Honorable Yoshihiko Noda
Minister of Finance
Ministry of Finance
Dear Minister Noda:
We write to you today to express our concern regarding Japan’s recent decision to intervene in international currency markets. By selling yen and buying dollars, the Bank of Japan has acted to artificially depress the value of the yen. Currency manipulation is harmful to not just American exporters, but to global trade and currency exchanges. After this action was taken, the value of the yen decreased against the dollar, the euro and the pound.
Currency values must be fairly determined through an open market and not pre-determined by governments. Competition in a free and fair environment is good for consumers, good for the global economy, and good for innovation. However, in a competitive global economy we cannot passively accept an unfair assault on American manufacturers and other exporters from subsidized goods imported from markets whose governments actively promote polices of currency manipulation. Last year, the U.S.-Japan trade deficit in goods was approximately $45 billion. This figure, while substantial, was depressed by the global economic downturn. In 2006 this figure was approximately $90 billion.
Past Japanese intervention in the currency markets to force the yen to artificially low levels, such as in 2003 and 2004, has been unfair and harmful to U.S. workers and businesses. As a result of those actions, Japanese exports to the United States were heavily subsidized by your government for years and created unfair competition.
In each of the past meetings of the G20, Japan has committed itself to encourage actions that would begin rebalancing chronic gaps between countries with excessive trade surpluses and those with substantial deficits. The recent Japanese sale of yen and purchase of dollars contradicts the commitments made by the G20 for this year, when each country agreed to refrain from actions that would prevent markets from rebalancing the gap between countries with unnaturally high deficit and surplus positions.
We urge you to refrain from additional intervention in currency markets, and to permit the yen to float freely and appreciate as currency markets allow. Global trade can only function when countries compete under fair, consistent rules and the market sets currency exchange rates – not governments.. We will continue to closely monitor any additional anti-competitive intervention in currency markets by the Japanese government to ensure that U.S. manufacturers and exporters are not being unfairly disadvantaged. We look forward to working with you on this important trade issue.