A picture of Representative Paul Tonko
Paul T.
Democrat NY 20

About Rep. Paul
  • The Issue of Trade in America

    by Representative Paul Tonko

    Posted on 2015-02-11

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    TONKO. Mr. Speaker, I do appreciate the opportunity to utilize the time allotted to the Democrats in the House to speak to the issue of trade. There are many who see this issue as an important issue.

    Others are now beginning to understand some of the dynamics as they relate to free trade versus fair trade and just what the dynamics of some of the last decades were, as recent past history has indicated, as they relate to [[Page H970]] American jobs and the American economy.

    This will be a good opportunity for us to address in fuller terms the issues of trade that we believe need to be addressed significantly well before we go forward with these negotiated contracts that could cause undesirable results, rather than those for which we all, I would believe, want to work--the opportunity to provide for individuals to tether the American Dream, to be able to go forth with dignity, to assume jobs that allow them to express their skills and God-given talents, and to be able to have that soulfulness of earning a paycheck.

    We want to focus on those issues here this evening. There are many who would suggest that a fast track is of great concern. Fast track is that circumventing of the responsibilities of Congress--the ability of Congress--to get more in depth with the proposed agreement, to understand fully what those impacts of the agreements might be on their local economy, on their State economy, and certainly on the national scene.

    It is important for us, I believe, to invest ourselves as a House. I would encourage those viewing this evening to ask their individual Members of Congress where they are on the fast track.

    Do you stand for the concept that goes back to the days of President Nixon, that gave a more expedited process and perhaps more authority over to the executive branch to get these contracts done? Or do you stand for the scrutiny that should rest with the Congress to make certain that no undue pressure is put on our local jobs and economy, falsely so? I believe that we do have that responsibility. As we have seen in recent years, we have grown the trade deficit of this Nation into the trillions of dollars. The challenge exists here, in the House, in this Congress, both Houses being faced with the added pressures of understanding what the dynamics of our trade deals are all about.

    The first step of which we express concern is that fast track concept where we, again, do not allow for the fullest efforts of Congress to be utilized--where we can amend, where we can adjust, where we can advise--and simply a thumbs-up/thumbs-down doesn't quite cut it for the people we represent, the working families the great many of us dub the ``middle class of America.'' As I enter into this discussion, I am reminded of the district that I represent in upstate New York that basically witnesses--hosts--the confluence of the Hudson River and Mohawk River.

    Those two valleys merge in the district that I represent, and they were the gateway, designed as an Erie Canal, barge canal system, that produced not only a stronger economy for New York, developed a port out of a little town called New York City, and then gave birth to a necklace of communities dubbed ``mill towns'' that became the epicenters of invention and innovation.

    It was there that many an immigrant tethered his or her dream, the American Dream, at those factory sites, where they were able to climb that ladder of opportunity, where they were able to lift their family's potential simply through the investment of hard work, pouring forth somehow their ability to land those jobs, and then to provide the creative genius that oftentimes developed new product lines or better product lines.

    That was a heyday of the American economy that, again, started through these mill towns. They became those locations of hope and prosperity. Then it led to a westward movement, an industrial revolution where we were the kingpin of the world's economy.

    We know the world dynamics are different today. We know that we need to adjust and respond, but we do that thoughtfully. We do it mindfully. We do it in a way that is academically measured, so that we don't introduce free trade but, instead, value fair trade, making certain that fair trade doesn't dispense unnecessarily of American jobs, that does not deflate our economy and finds us working on something, competing on something--the likes of an unlevel playing field. We need to have that level playing field be the result.

    Tonight, we are talking about some of those trade negotiations that will come forth. The most recent now is being viewed as a huge impact on the world's economy. A great percentage of the world's economy will be impacted by the TPP, the Trans-Pacific Partnership.

    We have to make certain that it is done correctly, that it is done sensitively, that it keeps in mind that the American contribution to all of this should provide us an ample opportunity, an equal opportunity, to compete for jobs.

    What has happened is that we have had these trade negotiations develop well beyond the original dynamics of trade barriers and tariffs. They are incorporating far more information and dynamics than just those barriers. We may reach to items like collective bargaining opportunities or environmental standards or guidelines for public health or requirements for public safety.

    If we relinquish some of those hard-fought battles in this country to make safer a workplace or to have a product be as safe as possible or where we have been sound stewards of the environment or we have offered dignity to workers to collectively bargain, to unite as an effort to score for better benefits and just remuneration for the work that they do, we want to make certain that those standards are not dumbed down, that they are not reduced, that the world comply with those given opportunities for which decades' worth of sweat equity was poured forth.

    Advocacy was echoed in the halls of government to make certain that these justified outcomes were fought for and realized and made statutorily etched into our government and our laws.

    We do not take this lightly. We take this effort as a serious challenge, one that would address some of these hidden impacts that aren't often shared well enough with the general public that we serve that are represented here in this Chamber.

    It is important for us to understand one of those growing concerns happens to be currency manipulation. It is one of those sneak attacks that really provides for a grossly unlevel playing field. We are discussing a critical aspect of the global economy and trade policy that has been ignored for far too long.

    This currency manipulation is causing a lot of concern on both sides of the aisle and is now pushing legislators to speak more forcefully. When countries manipulate their currency, it makes foreign-produced goods all the cheaper. That should signal an alarm.

    It doesn't end there. It also suggests or creates a situation where United States exports are less competitive. It doesn't end there because, as we lose in that battle, where we are less competitive, it then drains our economy by contributing to the downward pressure on wages in many sectors of our economy.

    We have seen this tremendous impact in trade deficit that has been produced in this country because of failed negotiated contracts and because of the impact of currency manipulation.

    Now, I understand that currency manipulation is not something most people talk about. It is not easy to conceptualize how devaluation of China's yuan or Japan's yen could impact us so severely. It puts American jobs in jeopardy. That is why we need to consider this issue much more seriously.

    We need to make certain that a structured response to this manipulation is part of the negotiations and part of statute from the Federal perspective. Millions of jobs, I would suggest, are at stake.

    If a country is going to cheat by devaluating its currency to make its products cheaper, it hurts America, and that hurt should not be tolerated. It is as simple as that.

    For anyone that claims to support unfettered free trade, I urge them to engage in this issue. Persisting currency manipulation distorts markets. It is as simple as that. As long as it is allowed to continue, trade cannot be free, trade cannot be fair.

    Now, there is a growing bipartisan consensus that strong and enforceable currency rules are needed, needed to ensure a level playing field for both the legislative perspective and as part of any new free trade agreement. We believe, many of us, that it should be part of statutory reform but, indeed, included in those agreements that are struck.

    [[Page H971]] Few actions by foreign governments do more to disrupt free trade and harm the United States job market than currency manipulation.

    A wide array of economic think tanks--including the Laffer Center at the Pacific Research Institute, the Peterson Institute for International Economics, the Economic Policy Institute, and the Center for Automotive Research--have all published what are extensive studies and commentaries supporting a crackdown on currency manipulation.

    These groups hold varying and diverse views on the benefits of free trade, so they may not all be coming from the same perspective, but all are united in their sense that trade cannot be free or fair if countries are allowed to cheat by manipulating their currencies.

    The Peterson Institute has support indicated for currency as a chapter in the Trans-Pacific Partnership. Certainly, the former economic adviser to the Vice President has also supported including a currency chapter in the Trans-Pacific Partnership.

    The Peterson Institute has estimated that America's trade deficit has averaged some $200 billion to $500 billion per year higher as a result of the manipulation.

    {time} 1845 That is happening from many angles, primarily from forces in China and Japan. Let me repeat those stats. $200 billion to $500 billion per year is the estimate for our trade deficit coming from some sound think tanks as a result of currency manipulation.

    The Peterson Institute also estimates that interventions in currency markets by foreign governments have cost United States workers as many as 5 million jobs over the last decade. So I believe it speaks to us profoundly and should cause us to respond to the challenges of protecting jobs, American jobs, through the issues of fairness. This is not asking for some unfair competitive advantage. It is simply reminding the world that we understand what is happening out there as dynamics work against us and that we are going to do what we can to inspire fairness in the process.

    The EPI, the Economic Policy Institute, found that ending currency manipulation could reduce the United States trade deficit by as much as $500 billion within 3 years and create as many as 5.8 million--5.8 million--American jobs. These are statistics that should not be taken lightly. They are reports that should feed our senses and build our passion to do what is correct here, to make certain that we inspire the sort of reforms to this process and to Federal law that would make for a much fairer outcome, a more fair outcome for the American public.

    Certainly there is no greater issue that rests before Congress these days than creating the climate that allows for private sector job growth. Now, government may not create jobs. That may not be our purpose, prime purpose, but we certainly can do all within our power to create the sort of climate, the environment that allows for job growth to be maximized.

    As we move into this desire to have world trade work as powerfully as it can and as fairly as it can for those of us in this country, we need to make certain that some of these reforms are embraced, and embraced in as enthusiastic a manner and expeditious a process as possible.

    There was a report released just last week by EPI highlighting the negative impact that the Trans-Pacific Partnership would have on the United States' jobs if currency manipulation is not addressed, and that report, dubbed Currency Manipulation and the 896,000 United States Jobs Lost Due to the United States-Japan Trade Deficit, contains estimates for job displacement for every congressional district. We are making certain that all of our colleagues know of this information. These are data that are relevant to the people that we represent. These are data that challenge us.

    I know that the study found that over 46,000 jobs would be displaced in New York State, including 1800 in the 20th Congressional District of New York, my home district. That is due, again, to the massive trade deficit that this Nation endures with Japan, a deficit that has been fueled primarily by currency manipulation.

    So how do we address currency manipulation? How does it work? To identify manipulation, we need first and foremost to look at three criteria, criteria that are based on the International Monetary Fund's definition.

    First, does the country of concern have large reserves of foreign currency, does the country have sustained trade surpluses, and does the country continue to buy large amounts of foreign currency? Worth repeating. Does the country have large reserves of foreign currency, does the country have sustained trade surpluses, and does the country continue to buy large amounts of foreign currency? Undervalued exchange rates allow the manipulating country to boost exports of their products and then put imports from other countries that are not cheating at tremendous disadvantage. Floating currencies should be self-adjusting based on trade deficits and surpluses. Cheaper dollars will lead to more exports and a balancing of the deficit over time. It is an ebb and flow relationship, and there is a natural tendency for that ebb and flow; but when enters in a greed factor, it can change those results and change them severely. The natural trend is not allowed to occur when a country intervenes in that currency market.

    Countries like China and Japan have prevented this self-correcting process by buying United States currency. This artificially strengthens the dollar and keeps us importing relatively cheap goods produced abroad.

    We already have a significant trade deficit with Japan, and that is very much measured in the automobile industry. Our trade deficit with Japan is second only to our trade deficit with China, and the majority of that deficit is in the automotive sector.

    Now, if you are to talk to any of our colleagues from Michigan, they will tell you about the devastation that has been borne upon, laid upon that auto industry in their home State. They have shared with us some very painful statistics. Well, the majority of that deficit, as I said, is in the automotive sector as it relates to Japan and China.

    Japan, for instance, imports one American car for every 100 Japanese cars imported into the United States each year. That is one car, one car imported from America into Japan for every 100 Japanese cars that are imported into the United States each year. That pattern can't continue. That is an easily predictable devastating outcome.

    Ford Motor calculates that the weakened yen of Japan added some $6,000 in profit, on average, per car imported from Japan in the years 2012 to 2013. So if you have that $6,000 advantage built into the sales price, where do you think we are going? It is allowing for such a devastating impact on the American worker, the autoworker of this country. It is unrealistic to have us as a nation to stand silently and not echo some order of concern.

    So what can the Congress do? Well, the House of Representatives should pass the Currency Reform for Fair Trade Act, and the administration should require strong and enforceable currency manipulation provisions in the TPP, in the Trans-Pacific Partnership. Bipartisan groups in the House and in the United States Senate here in Congress are introducing legislation which would use United States trade law to fight currency manipulation and provide consequences for countries that indeed do cheat.

    In the 113th Congress, the Currency Reform for Fair Trade Act, of which I was cosponsor, would have enabled the Department of Commerce to impose countervailing duties to offset the impact of currency manipulation. If you want to cheat, you pay. We are not going to stand for unfair trade. That bill had 157 bipartisan cosponsors, and identical legislation was passed with bipartisan support back in 2010.

    The legislation is identical to the House bill that passed with overwhelming bipartisan support in 2010. That bill is consistent with the World Trade Organization and its rules. I think that this bill is written intelligently to conform to our trade agreement rules by considering currency devaluations as an illegal trade subsidy.

    We already have mechanisms for addressing other illegal subsidies, but a bill such as that one, which is a start to addressing the problem, will not end [[Page H972]] the practice of currency manipulation. We also need to include provisions in our trade agreements. Those provisions included in those agreements would provide our trading partners with a strong deterrent for manipulating their currency in the first place. We also have to make sure that our trade obligations explicitly allow this approach to targeting currency manipulation.

    So I believe there are efforts within our grasp that we can work to achieve, that the changes and the reforms that we can provide will enable us to breathe free and grow and enhance the opportunities of our manufacturing sector.

    Now, we think back to the booming economy we had in the 1950s and 1960s. We think of all the post-World War II growth of this Nation. We think of the tethering of the American Dream. We think of the passion of immigrants who had come here to climb those ladders of economic opportunity. We think of the generations that were strengthened by those who made the journey. It was their dream to provide a better life for them and their children and their grandchildren, and they saw it happening within these mill towns, those epicenters of which I spoke, epicenters of invention and innovation, of creative genius that enabled us to be the best we could possibly be and where there was hope abounding in our communities.

    We can bring back that spirit. We can call for justice, social and economic justice as it relates to workers, as it relates to a world scene where there is a thought for those in the middle-income community, the middle class of America, the working families of America, strengthened and empowered because we get it here in Washington, where we speak to forces like counterforces, like currency manipulation that doesn't give us a fair shot, that creates an unlevel playing field, that will cost us dearly in jobs and in the growth of our economy.

    So there is much work to be done. We need to make certain that as stewards of these agreements we are insisting that our strength be heard at the table, that we make certain that we are informed about issues like child labor laws, about the rights for collective bargaining, about environmental standards, about the need for public health and public safety to be addressed in the workplace and in the product line that is developed.

    These are standards that are uniquely American at times, that should lift the world along with the people of this great country. We don't abandon those championing efforts that enabled us to be a stronger people, a safer people, building a stronger tomorrow. We don't abandon those principles. We build upon them. We share them with the other nations of the world.

    As I mentioned to a group of labor individuals in my district recently, there are consequences galore if we continue down this path.

    {time} 1900 We are selling short the American worker. We are offshoring jobs that we can ill afford to ship away.

    But it is beyond that. Not only does the American worker lose her job, not only does the American worker lose his hope, we then find economies around the world accepting the fact that their citizens are working for 75 cents an hour. Where is the justice to any of the workers around the world? This is an impact that has a ripple effect that pours forth in painful measure with insensitivity and gross, gross negative outcomes.

    We can do better than that. We can be a country that will stand tall and know from the growth and progress that we have achieved through our halls of government, through the efforts of labor and unionized forces that came through labor and said, We are better than this. We need to share in the wealth of our economy.

    We need to make certain that we respect our labor forces. The unionized efforts gave us sound benefits and sound salaries and good working conditions, acceptable standards. We are not going to ship that away. We are not going to allow for currency manipulation and the undoing of the American ideals, to be forsaken for the sake of a factor that has taken this global economy and produced these outcomes that are grossly unfair.

    When we see a trade deficit in the trillions of dollars, when we understand that addressing currency manipulation can undo by hundreds of millions of dollars a deficit in a short order of 3 years, we can make a difference. We can be a force of change. We can be the voice of reason. We need to be that leader at the table.

    Congress needs to be involved, invested in this opportunity. We need to make certain that the academics guide us here, that we pay attention to the data that are speaking to our senses.

    We are rejecting all for which we fought. We are rejecting all for which labor painfully organized and achieved successful outcomes. If there is not justice for all in this process, it will not work.

    But the American standard, the American appeal, the American hope that has been a beacon to people around the world should be that guiding force, should be the noble effort that allows all of us to understand that by committing to these issues of social and economic justice, we will have strengthened not only the American worker but workers around the world. An unlevel playing field simply does not work here. And offshoring jobs is the painful, gross neglect of the American Dream. The American Dream was one that found people playing by the rules, rolling up their sleeves, and expecting to taste success.

    We can still build that aura within the halls of government. We can create those standards that determine a fair and just outcome. And we can speak soulfully to the people who are counting on us in the given communities they call home across this great expanse called the United States of America. We have always been that higher standard. We have always been the people in search of a better tomorrow. We have always been a society indebted to justice.

    Throughout our annals of history, stories replete of us making a difference by working our process called government, by making certain it empowers the individuals and families of this Nation in a way that simply speaks to what is right. We know it is right here.

    There have been a number of folks in this House championing the effort of fair trade, talking about the inclusion of Congress in a way that allows for amendments and improvements to agreements and certainly an outspoken force that speaks to holding fast to those standards that speak to the wisdom that guides us, of being fair and respectful to those who labor, who labor steadfastly, who ask only to be treated as an equal partner in this process.

    It is an honor to represent those voices that speak so profoundly well in the workplace, asking for that dignity of work, asking for just remuneration for the sweat equity that they pour forth in wanting to have just that better step forward for their children and their grandchildren as they grow to their tomorrows, filled with hope. We can provide hope. We can build change. And we can issue justice if we put our mind, heart, and souls to that effort. I suggest we can do it. It is within our grasp.

    With that, Mr. Speaker, I thank you for the opportunity and yield back the balance of my time.


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