Oct 13 2003

Graham Pushes Congressional Action to Aid Textile Industry

Chinese Currency Manipulation Causing Job Losses in the Upstate

WASHINGTON – On a tour of Mount Vernon Mills, U.S. Senator Lindsey Graham (R-South Carolina) today said it is past time for tougher safeguards to protect the textile industry from unfair, foreign competition, particularly from China. Graham noted the textile industry has been hard hit by the Chinese intentionally manipulating the value of its currency and those actions are having a direct impact on job losses in Upstate South Carolina. “There’s a perfect storm brewing in China which could destroy what remains of the textile industry in the United States,” said Graham. “China’s access to the U.S. textile and apparel market more than doubled in 2002, growing by an astounding 117 percent and is up an additional 114 percent so far in 2003. These are staggering numbers and the net result is we’re losing jobs here at home.” Graham blamed the Chinese for intentionally manipulating the value of their currency creating a competitive disadvantage for American producers. He noted the Chinese yuan has been tightly pegged to the US dollar in a range of 8.3 yuan per dollar since 1994.  Given China's enormous growth over the past decade, this fixed level most likely does not reflect its true value. If the yuan were allowed to float freely, like other major currencies, many economists believe it would appreciate substantially against the U.S. dollar. Economists at Goldman Sachs have estimated that the yuan may be undervalued by 15 percent and other experts say that number could be as high as 40 percent, meaning that the Chinese intentionally lower their currency's value to make their goods and services cheap internationally.  The practical effect of this currency manipulation means Chinese manufacturers receive a 15 percent to 40 percent discount on their exports, providing them with a nearly insurmountable advantage over American producers. “I fear that if we do not act quickly to counter China’s illegal efforts to dominate the United States apparel market, our domestic suppliers will not be able to recover,” said Graham. “I believe now is the time to slow this massive surge of Chinese imports. “We have lost thousands of textile jobs in South Carolina, not because the Chinese work harder or smarter, but because they are cheating,” said Graham. “The American textile worker can compete with anyone given a fair opportunity. Unfortunately, that opportunity does not exist in today’s’ economy.” Graham noted several avenues to help the industry. These include:
  • Congressional passage of legislation Graham introduced along with Senators Charles Schumer (D-NY) and Jim Bunning (R-KY) which imposes a 27.5 percent tariff on all Chinese imports if they do not put an end to currency manipulation. The legislation, S. 1586, allows the President to remove sanctions once he certifies that China has moved to a market-based currency. The tariffs would kick in after a 180 day grace period to ensure that Treasury officials have adequate time to work with the Chinese to institute reforms. Graham noted the U.S. Senate is on record in support of changing the Chinese currency practices. Last month, the body passed Senate Resolution 219 calling on China to abide by its international agreements and adopt a market-based system of currency valuation. The resolution passed Senate late last month without a single dissenting vote.
  • Implement the China safeguards. In our trade agreements with China, the Bush Administration has the ability to impose tariffs on Chinese textile imports to level the playing field. These safeguard provisions should be activated. The safeguards would re-establish a quota on unrestricted textile or apparel categories --  such as knit fabric, dressing gowns and robes, and cotton gloves -- for a period of one year and could be expanded for two additional one-year periods.
“The textile industry provides jobs and benefits to hundreds of thousands of Americans,” said Graham. “The Bush Administration must act to protect these jobs from a communist dictatorship that manipulates and cheats rather than follow the rule of law.” #####