Time for waiting has passed, Congress must act now

WASHINGTON, DC –The U.S. Department of Commerce today released trade deficit figures confirming once again that the Administration’s trade policy is on the wrong track. According to the figures, the U.S. trade deficit surged once again to an all-time high of $66.1 billion in September 2005, up by 12% from the August trade deficit of $59.3 billion. As reported by the Commerce Department, the decline in U.S. exports of $2.8 billion in September was overwhelmed by an increase of $4.0 billion in the imports to the United States of not only goods but also services.

The shortcomings with U.S. trade policy are particularly evident in the case of U.S. trade with China.  Here, the trade deficit has increased by 9 percent, from $18.5 billion in August to $20.1 billion in September, as exports decreased by $0.7 billion to $3.2 billion, while imports increased by $0.9 billion to $23.3billion.

“When it comes to meaningful trade policy with China, this Administration is missing in action,” said Rep. Cardin.  “Once again, we are faced with record-breaking trade deficits.  And once again, the Chinese have failed to act on their promise to revalue their currency.  Every day this Administration waits, we give an artificial trade advantage to the Chinese.  It is critical the President make real progress on this issue during his trip to Beijing later this month.   Congress must also take action to deal with these growing problems.”

As many predicted, China’s commitment earlier this year to revalue its currency has fizzled. When China revalued its currency (the yuan) by 2.1 percent in July 2005, it said it would allow the yuan to appreciate as much as 0.3 percent per day against the dollar. Instead, the yuan has risen by this amount over the last three months. The continued undervaluation of the yuan has made Chinese products artificially cheaper, exacerbating the U.S.-China trade deficit.

Furthermore, The U.S. Treasury Department’s bi-annual report on China’s currency, which is required by statute to be issued on October 15, still has not been issued.  “The failure of the Treasury Department to provide the report on China’s currency in a timely manner is unacceptable to Congress and to the American people.  I call on the Administration to release it immediately,” said Rep. Cardin.

Democratic members of the House Committee on Ways and Means have recently proposed a series of measures to address the growing problem of the trade deficit with China.  These measures include the filing of two section 301 cases paving the way for the Administration to challenge China’s currency manipulation practices within the World Trade Organization as well as introduction of comprehensive legislation in July to rectify a number of the outstanding trade issues between the US and China, including in the areas of currency manipulation, intellectual property rights enforcement, other WTO commitments that China has not lived up to, and China’s ongoing use of industrial policy and subsidies to advantage its industries, as well as steps to strengthen and update the U.S. sectoral safeguard mechanism.  

Democratic members have repeatedly called on Ways and Means Chairman Bill Thomas to bring the legislation, The Fair Trade with China Act (FTCA), H.R. 3306  before the committee promptly. 

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