AFS Joins NAM in Debate on Currency

Feb. 29, 2004
Fair Currency Alliance seeks to build pressure to address undervalued Chinese currency

The American Foundry Society is joining the National Assn. of Manufacturer’s Fair Currency Alliance, a group coordinated by the NAM to focus the federal government’s attention on the dilemma caused by Chinese currency policies —— and the financial losses suffered by U.S. manufacturers as a result of China’s currency being fixed to the dollar.

China’s currency, the yuan, has been fixed to the dollar in order to under-value U.S. currency by as much as 40%, the FCA contends. The result is that U.S. goods are unaffordable versus Chinese products, and China is able to accumulate more foreign currency to underwrite its own liquidity.

The problem has been particularly acute since China joined the World Trade Organization in 2001. Many U.S. industries have been injured by the effects, and the Fair Currency Alliance is composed of many trade associations and unions representing these manufacturing agricultural industries.

The FCA plans to launch a petition to pressure the Bush Administration to address "Chinese currency manipulation," according to AFS. "The petition would derive from Section 301 of the 1974 Trade Act, which allows the U.S. to take action when foreign countries violate U.S. rights under trade agreements or engage in practices that are discriminatory, unjustifiable and unreasonable to U.S. trade," it stated.

Patricia Mears, the exec. director of FCA, said, "While China is accumulating massive foreign currency reserves in an effort to keep its currency undervalued, the bilateral trade deficit has ballooned to almost $130 billion. The problem is still solvable, but China must reform its currency practices as a significant step in leveling the playing field for American producers and workers.

"The Alliance believes that a Section 301 case will provide the Bush Administration with critical leverage in negotiations with Beijing by helping ensure both the necessary time dimension and the specific focus needed to resolve this issue," Mears said.