Is It Finally Time for Currency Trade Legislation?

The September trade deficit with China, at $30.5 billion, was the highest on record. By that I mean, not only the highest on record with China. It is the highest on record the United States has ever had with any trading partner in one month. That means that manufactured goods, including high technology goods, are coming in from China at an ever-increasing rate. And they are fueled by unfair trade.

Just about a year ago, the presidential election focused a great deal of energy on manufacturing in the United States. In the second presidential debate, manufacturing came up 15 times between the President and Governor Romney. Each tried to outdo the other. Early in the debate, the president said "Number one, I want to build manufacturing jobs in this country again." Several months before that Gene Sperling, Assistant to the President for Economic Policy, gave a groundbreaking key note speech on the issue at the Second Annual Conference on the Renaissance of American Manufacturing at the National Press Club, in favor of building up manufacturing, probably the first time a senior White House official threw down the gauntlet in favor of a tough manufacturing policy.

But since that time, not much has happened. Build up manufacturing jobs in this country, as the president suggests? Not happening. The employment numbers are about where they were a year ago and much worse than they were when the president first took office. Manufacturing output in the U.S. is up slightly, but not back to where it was before the recession. And the trade deficit continues unabated, making manufacturing improvement nearly impossible. No matter how great our industries may be, they cannot compete with governments funding foreign manufacturers who can churn out product with no concern about profit. The small training programs the president has talked about and the cheer leading he does to encourage foreign investment in manufacturing in the U.S. will not solve the problem on their own.

Why do we put up with this, and the consequent pain in our job numbers and in our economic recovery? As I've written before, there are many people in Washington who oppose building up the U.S. manufacturing sector, for their own parochial or monetary reasons.

But the climate may be shifting slightly. Over the last few months, you have the feeling that Congress at least -- if not President Obama -- has had enough. A substantial number of Republicans have spoken up in favor of -- finally -- dealing with the currency undervaluation that fuels the foreign export of manufactures to the United States. Senator Rob Portman of Ohio -- an influential Republican member of the Senate Finance Committee and former United States Trade Representative -- is one of them. House Ways and Means Committee Chairman Dave Camp is another. They join a large number of Democrats and union officials that support action, including Senator Sherrod Brown, Democrat of Ohio, who recently introduced legislation on the issue. Foreign governments including China and Japan keep their currency at very low levels through manipulation and this allows them to export to the United States at very low prices, undercutting our producers. This is probably the largest industrial subsidy in the history of the world. It has gone on for years -- particularly undertaken by China.

But there is a simple way to deal with it, and the bill that would do that has passed both the House and the Senate at different times. The bill provides that cases under U.S. trade law, specifically the countervailing duty law, could be filed against such currency manipulation when the imports caused by the manipulation harm U.S. industry. Sounds simple and limited, doesn't it? Well, it is. It would not apply across the board, but only to particular imports and only after a review by the U.S. Department of Commerce as to whether there were subsidies and by the U.S. International Trade Commission as to whether there was injury to a U.S. industry. The Administration, however, has never supported the bill and it has stalled out in Congress.

Passage of this bill and signature by the president could make a big difference in the new year. It's time for the president to live up to the spirit of his campaign promises. He should voice his support for this bill and encourage both houses of Congress to attach it to their next major piece of budgetary or fiscal legislation. Millions of American workers will thank him for it. It will lead to job creation. And it will show we are serious about real trade reform that will bring manufacturing back to this country.