Made in China: The Senate Deals with the Global Economy

The Senate has shown support for a measure that would penalize China for trade practices that threaten manufacturing jobs in the United States.

Senators Charles E. Schumer (D- New York) and Lindsey Graham (R- South Carolina) offered an amendment to the State Department authorization bill (S 600) that would impose a 27.5 percent tariff on Chinese imports unless that nation allows its currency, the yuan, to appreciate. The measure would allow for six months of negotiations, but if no agreement could be reached, the tariff would be imposed.

The Senate demonstrated support for the measure by refusing to table or kill the amendment by a 33-67 vote. But Schumer and Graham agreed to withdraw the amendment in exchange for an up-or-down vote later in the year.

Making deals

More specifically, the proposal will go to the Finance Committee for consideration, but if the committee doesn’t move the legislation by July 27, 2005, it will be sent without amendments to the Senate floor for two hours of debate and a vote.

This deal was orchestrated by Foreign Relations Chairman Richard G. Lugar (R- Indiana) and Finance Chairman Charles E. Grassley (R-Iowa), who worried that the amendment would further endanger the State Department authorization bill, which already hosts a controversial amendment by Senator Barbara Boxer (D- California).

What’s up with China?

China has been intentionally suppressing the value of its currency by pegging it to the U.S. dollar, which has declined in the last three years. By devaluing the yuan in this way, the Chinese have made their goods in the U.S. less expensive while making American goods in China more expensive.

In fact, Chinese goods are so cheap, that the whole world is buying them. In the first two months of 2005, China exported $10.9 billion more than it imported - a $10.9 billion trade surplus.

Much of the world is importing more from Chinese than it exports to them. The European Union is racking up a significant trade deficit with China and may eventually join forces with the United States to impose stricter trade laws.

The January 1, 2005 expiration of a global export quota hasn’t helped the situation, allowing China to export over a thousand percent more cotton trousers, shirts, and underwear to the United States. U.S. textile manufacturers are complaining about the surge in Chinese imports and have convinced the Bush administration to investigate the situation.

Critics’ point of view

But some say that curbing imports will do little to save American jobs and that trade barriers, like the Schumer-Graham proposal, simply raise prices for American consumers. When price inflation happens, interest rates for loans go up and businesses borrow less, invest less, and even fewer jobs are created.

Here, philosophies of trade come into play. Some believe that everyone benefits from a global economy as long as trade is allowed to flow freely. Others feel that trade flows should be directed by national governments in order to ensure profit. Still others say that international trade should be severely limited, since American workers are suffering at the expense of worldwide trade.

But even if international trade creates more winners than losers, it still hurts to lose. From a global perspective, it may make sense to let the U.S. textile industry disappear if it can’t compete with China, but from an American textile worker’s perspective, government should help protect her American job from fleeing overseas.

Our relationship with China has many, many parts. We are tied to China is many ways.

• China profits from trading with us and invests these profits in our government bonds. We use that money to pay our military. Without that money our deficit would be even greater.
• China and the United States collaborate on pressuring North Korea about nuclear weapons.
• China is a major consumer of oil and natural gas, causing the price of energy to rise worldwide. And China is using their profits from trade to develop a worldwide network of oil production and shipping lanes.
• China is concerned about our promise to protect Taiwan while at the same time we have recognized that there is just one China.

Which of these issues should guide our policies about China? What can or should we do about jobs?

What do you think?

WomenMatter is a place to discuss life issues with other women. We don’t want to wedge women apart, but rather bring them together to dialogue. To log onto one of our online forums, click here.

WomenMatter encourages women to educate themselves on the issues and then approach their representatives with ideas.

Even though the election is over, your voice is vital. Make sure your leaders know what’s important to you. To see how your representatives vote and to contact them, click here.

WomenMatter is dedicated to empowering women to participate in the political process. To do this we have invested in the most in-depth NONPARTISAN information, because we trust each woman to make up her own mind.

• We track nine issues every week and update this website several times a week.
• We launch after school GirlsMatter Clubs in middle and high schools to grow the next generation of politically aware women through a full curriculum and startup kit on girlsmatter.com.
• We do continuous research to make sure that we are meeting the needs of women across the country of all ages, races, incomes, preferences, and religions.
• We provide partnerships with nonpartisan organizations that provide services to women and advocate for them.

We offer all our services free of charge without memberships or subscriptions. To help us maintain this work - not just in election years but as a continuing part of women’s lives - please make a tax deductible donation, click here.

Article Posted on: 4/23/2005