House Minority Leader Nancy Pelosi made a nice speech in the middle of deliberation over the Colombia free trade agreement, arguing that the only item worth discussing on the trade agenda was the bill forcing rebalancing of China’s currency practices. The number of jobs at stake with the China measure dwarfs that of the free trade pacts, first of all:
Much has been said about this (Colombia) agreement creating 6,000 jobs in the United States. 6,000 jobs. Now we want to fight for every single job for the American people. But it is ironic or strange to hear a big fuss about, ‘We have to do this because it is going to create 6,000 jobs.’ when the leadership of this body is totally ignoring the fact that we are losing 1 million jobs, 1 million jobs because of the China currency bill.
When it was discussed that these bills would be brought to the floor, many of us said we shouldn’t even be considering these bills—6,000 for Colombia, perhaps 70,000 for Korea, maybe 1,000 for Panama. 77,000 jobs—that’s significant if, in fact, those numbers really bear out. But let’s assume they do for a moment. We are making a big deal out of 77,000 jobs, which are a big deal, but how much bigger a deal is it to say we are ignoring the fact that we are losing over 1 million jobs per year because of the China manipulation of their currency.
The distinguished Speaker has said if we push this bill, we will start a trade war with China. My, have I heard that song before. Many of us have been fighting for a better relationship with China in terms of our trade relationship, and for at least two decades we’ve been fighting for opening of our markets to China, to stop the piracy of our intellectual property, the list goes on.
But this manipulation of currency—okay so Speaker says we are going to start a trade war. 20 years ago, when we started this debate following Tiananmen Square, our trade deficit with China was $5 billion a year. We tried to use our leverage with most favored nation status to get the Chinese to open their markets, stop pirating intellectual property, etc. And everybody said, ‘If you do that, you will start a trade war. Just let the natural course of events take place.’
Well, we didn’t start a trade war. But do you know what China’s surplus with the United States is today? What our deficit is with China—$5 billion dollars a year 2 decades, 20 years ago when we fought this fight and lost. It’s now $5 billion per week. Over, over, more than $5 [b]illion a week, over a quarter of a trillion dollars in surplus does the Chinese government enjoy in their relationship with the United States. So you’re telling me that if we say, ‘We want you to act fairly in terms of your currency’ that they are going to give up a quarter of a trillion dollars in surplus, much bigger exports to the United States, but in surplus.
I should add that the intent of the bill has begun to work. The yuan made its biggest daily gain ever this week and rose to its highest level against the dollar. Showing the Chinese that the US means business about artificial currency valuation gets results. But going all the way back to 2005 and saying that the yuan is up 30% doesn’t really serve as good analysis. In recent years, China stopped revaluation during the global recession, only started appreciating in 2010, and have done so at barely a crawl until stopping entirely a few months ago, amidst more recession signals. So this large one-day increase did not happen in a vacuum. And over time, a quicker revaluation will help rebalance global trade in a variety of ways. Not to mention the fact that other Asian economies peg their currency to China’s, so this will lower the cost of exports with an entire region beyond China.
So Pelosi is right, the House should vote on the China bill well before the so-called free trade pacts. But she could also ensure this. She could offer a motion to recommit when the trade deals come up for a vote later today. That motion could say that the bills need to go back to committee and have the China currency bill added to the legislation. There are over 220 co-sponsors for the currency reform measure in the House. That motion to recommit should be able to pass easily.
But there’s a deadline to hit on the trade deals. South Korean President Lee Myung-bak is headed to Washington to address a joint session of Congress tomorrow. So everyone wants the bills done today, as a present to the South Koreans. That’s why both houses of Congress are debating the deals and passing them simultaneously, despite the dubious Constitutionality of that move.
So while Pelosi made a nice speech in support of the China currency bill, I don’t think she’s prepared to do what’s necessary to advance it, if that comes at the expense of neoliberal, corporate-written trade deals that will likely cost US jobs and have the country do business with counterparts that run massive tax-avoidance schemes, work with North Korean slave labor and kill trade unionists.
UPDATE: So Pelosi took my advice. The currency bill was made as the motion to recommit. And practically the entire GOP caucus, including the 61 co-sponsors of the bill, voted against it. Just a reminder of the whole “Republicans want the economy to fail” thing.
