Friday, October 14, 2011

Corker: Don't Start a Trade War

Excerpts from Senator Corker's floor speech:
There’s no question that China manipulates its currency, but I don’t believe this bill would bring any production to the U.S. or create one job here in America. This approach is a typical Washington, cut-your-nose-off-to-spite-your-face response that would prove counterproductive.

We’ve seen this play out before. In 1930, in a moment of populism, Congress reached for simple answers to complex problems and passed the Smoot-Hawley Tariff Act. The result was a deeper depression and a decade of increased joblessness.

If we want to do something productive regarding China, we should focus on pushing the Chinese to end preferential procurement policies, addressing China’s disregard for intellectual property rights, encouraging the Chinese to make investments in manufacturing plants in the U.S., and ensuring that America maintains access to the 1.3 billion Chinese consumers. These are the right policy responses toward Beijing. Unfortunately the bill currently on the Senate floor does none of this, but instead would be the opening salvo in a new dynamic of hostile relations.

To me, one of the most shocking aspects of this debate has been the Home Alone syndrome at the White House – a total lack of leadership from this administration on an issue of great international importance.

In the above video Senator Corker voices his strong opposition to S.1619, the Currency Exchange Rate Oversight Reform Act, sponsored by Senator Sherrod Brown (D-Ohio). On Tuesday of this week, the Senate voted 63-35 to pass the measure. Twelve Republicans joining all but three Democrats in voting for the bill.(To see how they voted, click here.)

The bill provides for retaliatory duties on Chinese exports if the value of the Chinese currency, the yuan, is unfairly misaligned. In the House, the bill does not have the support of House Speaker John Boehner who has called the bill dangerous to economic relations between the US and China. While Boehner has said he will not bring the bill to a vote, there are some Republicans in the House who may join House Democrats and support the measure. President Obama, to his credit, has failed to back the measure which is widely favored by member of his own party, saying it may violate World Trade Organization rules. Obama however has failed to exert leadership to dissuade Senate Democrats from supporting the measure.

When time are tough it is tempting to look for scapegoats for which to blame for our problems.  I think Corker is exactly right. Should this bill become law, it could be the trigger that turns our deep recession into a full-blown, world-wide depression. Did we learn nothing from the Great Depression?

Senator Corker is the voice of reason in our nations capital. I wish we had more calm, thoughtful, intelligent, pragmatic people like Senator Corker serving us in Washington.

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