Some large manufacturers disinterested in policing Chinese currency manipulation
By Staff -- Manufacturing Business Technology, 11/1/2006 7:00:00 AM
The board of the National Association of Manufacturers (NAM) voted against the recommendation of its own International Economic Policy Committee (IEPC) in choosing not to support the proposed bipartisan-sponsored Chinese Currency Act of 2005 now before Congress.
The membership committee vote in June was near two to one in favor of supporting the bill; the NAM board vote roughly the reverse. At the time of the board vote, the U.S. House of Representatives legislation initially sponsored by Reps. Duncan Hunter and Tim Ryan had 178 cosponsors fairly evenly split between Republicans and Democrats.
"Under normal circumstances, the IEPC recommendation would become policy, but this particular issue is very divisive," says John Hoskins, Jr., director of governmental affairs for Buffalo, N.Y.-based Curtis Screw Co., and a NAM member. "There are clear lines drawn between large multinational corporate members and small and medium-size manufacturers on this issue—for obvious reasons."
The legislation adds currency manipulation to the list of unfair trade practices warranting action under U.S. and World Trade Organization (WTO) trade law. The bill would allow domestic manufacturers—especially small and medium-size companies—to file currency complaints against China with the U.S. International Trade Commission, seeking WTO approval of sanctions on Chinese products until the illegal practice is ended.
Alleged currency manipulation, seen by many American manufacturers as effectively an illegal government subsidy giving Chinese exports unfair global advantage, is deemed as fueling trade imbalance between the U.S. and China. Multinationals that have set up production there are viewed as reaping similar benefit from the currency manipulation.
"NAM follows the 80-20 rule," Hoskins says. "Eighty percent of the members are small guys, but big guys give 80 percent of the money to operate. The big guys have invested billions in operations in China under the current currency regime. If somebody starts to mess with that, the value of their investments would be greatly altered. When they export from China to the rest of the world, they benefit from a 40-percent undervalued currency."
According to Pat Mears, NAM director of international commercial affairs, "Supporting the Hunter-Ryan bill wasn't what the board thought would advance our goals. NAM is still concerned with the problem. We're putting together a special U.S.-China task force to work with Treasury Secretary Paulsen, making our views known and seeing how best we can assist the administration in finding ways to help small companies that are using existing trade law."
Brian O'Shaughnessy, president and CEO of Rome, N.Y.-based Revere Copper Products, the company founded by Paul Revere, says, "It's fair to say the multinationals with interests in China, or importing components from China, prevailed with their view to take, let's say, a 'Go slow' approach."
O'Shaughnessy is a board member and also a member of NAM's Small and Medium Manufacturers (SMM) group. He says the 300-member NAM board has only 50 members that are small and medium-size manufacturers, and that the "vote not to support Hunter-Ryan was two to one against. While it went down, it wasn't as overwhelming as you might have expected."
Ryan Keating, communications director for Rep. Tim Ryan, says the sponsors of the bill will push for passage of the legislation in the lame-duck session following the November elections, adding, "If we don't get it through then, we'll push to get passage in the next Congress."
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