The U.S. Senate has approved the Currency Exchange Rate Oversight Reform Act of 2011, a measure that could force the President to be more aggressive in seeking tariffs and other penalties against China and other countries with misaligned currencies. The President is concerned how the bill might lead to retaliatory tariffs. Senator Joe Lieberman, I-N.H., is worried about engaging in a mutually damaging trade war. While House Speaker John Boehner, R-Ohio, describes the bill as a pretty dangerous move, he seems disinclined to schedule a vote in the House.
National Farmers Union President Roger Johnson is very pleased, because it is a comprehensive piece of legislation that uses U.S. trade law to counter the economic harm caused to U.S. farmers, ranchers and manufacturers due to currency manipulation. According to Johnson, before our trade can truly be fair, we need to ensure that all countries are playing by the same rules.
"Unbalanced trade agreements negatively impact the economy," Johnson said. "By ensuring that the currencies of other countries are valued fairly, U.S. companies are able to compete on a level playing field, which helps to create and preserve jobs. The U.S. has been harmed many times before because other countries illegally manipulated their currency, and we continue to be harmed even today."
Johnson cited an Economic Policy Institute study that found that if the Chinese yuan were revalued to its equilibrium level, up to 2.25 million jobs could be created through an increase in U.S. gross domestic product.
"This is legislation that garnered overwhelming bipartisan support in the House last year, passing 348-79," Johnson said. "We urge the House to pass this bill and the president to sign it as quickly as possible to correct this problem."