Hatch on Senate Vote on Currency Bill

Utah Senator Says, “By voting against cloture we can stand against unilateralism, stand against protectionism, stand against retaliation, and stand against ‘quick fix’ solutions and slogans”

WASHINGTON – In a speech on the Senate floor this morning, U.S. Senator Orrin Hatch (R-Utah), Ranking Member of the Senate Finance Committee, outlined his opposition to the Currency Exchange Rate Oversight Reform Act of 2011, S.1619.

“In my mind the choice is clear. If we support the motion to invoke cloture on the underlying bill we would be sending a signal to China that the U.S. Senate is angry over China’s manipulation of its currency, but we are not really serious about taking real, long-term action to stop it,” Hatch said on the Senate floor this morning. “We are also telling the world community that the U.S. is turning inward once again, seeking protectionist solutions to global problems, and not really interested in working with other countries to solve our current international economic crisis. At the same time we would be interjecting further uncertainty into our own economic recovery, as our exporters and workers face potential retaliation from one of our leading trading partners.”

Hatch has introduced an amendment, endorsed by the U.S. Chamber of Commerce, The Emergency Committee for American Trade, the Retail Industry Trade Association, the Financial Services Roundtable, Americans for Tax Reform and others, that would fix some of the fundamental flaws in the bill by:

•   Mandating the Administration to negotiate within the International Monetary Fund and the World Trade Organization to develop effective rules and remedies to mitigate the adverse trade and economic effects of fundamentally misaligned currencies designated for priority action and to encourage priority action countries to modify their currency practices.
•   Directing the Administration to negotiate new plurilateral agreements to achieve these same objectives if these WTO and IMF negotiations do not produce results within 90 days, the Amendment.
•   Requiring a report to Congress on the Administration’s progress within 180 days, including whether additional authority is needed from Congress to mitigate the adverse trade and economic effects of China’s currency manipulation or to implement coordinated actions against currency manipulators under these negotiations.
•   Striking provisions in S. 1619 which required increased duties on imports, bans on federal procurement and mandatory opposition to multilateral loans.
•   Establishing a new priority negotiating objective for ongoing trade negotiations (and future trade negotiations) to prohibit parties to the agreement from fundamentally misaligning their currencies and to work together to mitigate the adverse trade and economic effects of non-party priority action currencies.

Below are Hatch’s full remarks delivered on the Senate floor this morning:

Mr. President, this morning the U.S. Senate will have an opportunity to send a strong message to China and the World community. Whether that signal is one of inward protectionism or outward engagement remains to be seen.

In my mind the choice is clear. If we support the motion to invoke cloture on the underlying bill we would be sending a signal to China that the U.S. Senate is angry over China’s manipulation of its currency, but we are not really serious about taking real, long-term action to stop it. We are also telling the world community that the U.S. is turning inward once again, seeking protectionist solutions to global problems, and not really interested in working with other countries to solve our current international economic crisis. At the same time we would be interjecting further uncertainty into our own economic recovery, as our exporters and workers face potential retaliation from one of our leading trading partners.

There is a better way.

We can defeat cloture and give Senators an opportunity to vote on my amendment, which not only has the best chance of actually resolving our serious currency problems with China, but also demonstrates to the international community that the United States will continue to lead by promoting trade liberalization and holding countries accountable to the rules of the game — for the long-haul. If given the chance to vote on my amendment, we can demonstrate our serious commitment to developing long-term and meaningful solutions to the persistent problem of currency manipulation. And it tells them that we are committed to starting that process today.

Yesterday I outlined some of the serious problems with the unilateral approach adopted by the proponents of this bill. Allow me to summarize them for the benefit of my colleagues. First, this is not a jobs measure. Proponents of the unilateral approach argue that their bill will create thousands of jobs right now, and millions of jobs in the years ahead. But all we have to do is take a close look at the numbers and the process laid out in the bill to see that this is not the case.
I am also concerned that the bill will inject economic instability in a key bilateral relationship and subject U.S. exporters to potential retaliation by the Chinese. Yesterday the White House also expressed concerns about the bill, though they still have not stated publically what those specific concerns are. A growing chorus has come out to criticize the unilateral approach in this bill.

The New York Times called this bill a “bad idea” and “too blunt of an instrument” which, if enacted, is very unlikely to persuade China to change its practices, while adding an explosive new conflict to an already heavy list of bilateral frictions.

The Wall Street Journal called the underlying bill “the most dangerous trade legislation in many years.”

The U.S. Chamber of Commerce issued a letter yesterday stating that the unilateral approach in the underlying bill would be counterproductive in persuading China to alter its currency practices and that “in the end, such unilateral action would very likely cause retaliation by China and ultimately damage the U.S. economy, including exporters, investors, workers, and consumers.”

Again, there is a better way.

My amendment calls for a bold new approach which will empower United States negotiators to work within the WTO and the IMF to develop long-term effective remedies to counter the effect of currency manipulation, by China or any country, and develop practices to persuade countries to stop currency manipulation. If that does not work within 90 days, they are directed to go outside of these institutions.

My amendment also would establish a new priority negotiating objective, so as we negotiate trade agreements with our trading partners, we should all commit in those agreements to not manipulate our currencies. My amendment also ensures that we have a partner, by holding the Administration accountable until they achieve results.
Now, this is not a quick fix. But truly resolving complex and long-standing problems such as currency manipulation will take much more than a quick fix. It requires that we stand together as a country and do the hard work necessary with the international community to achieve real, long-term results.

Although my amendment was only recently introduced, it is already gaining widespread support. The U.S. Chamber of Commerce endorsed the Hatch Amendment arguing that coordinated and multilateral pressure, through international organizations, is essential to encouraging China to adopt market-determined currency and exchange rate policies. That is precisely the approach taken in the Hatch amendment.

This morning, Douglas Holtz-Eakin, former director of the Congressional Budget Office, wrote in National Review Online that the Hatch Amendment “is a more complex solution to the [currency] problem” and while “not nearly as sexy or slogan-inspiring as the Currency Exchange Oversight Reform Act…happens to have a much greater likelihood of being effectual.”

Americans for Tax Reform wrote a letter in support of my amendment saying that the Hatch amendment “offers a sensible approach that utilizes the mechanisms created by the international trade community to resolve such disputes.”

The Emergency Committee for American Trade says that the Hatch Amendment “will more effectively address concerns about currency misalignment by China and other countries, without opening the door to many harmful effects on U.S. business and workers.” These and other organizations, such as the Retail Industry Trade Association and the Financial Services Roundtable recognize that there is a better way.

Today we face a clear choice. By voting against cloture we can stand against unilateralism, stand against protectionism, stand against retaliation, and stand against “quick fix” solutions and slogans. We can then turn to vote on my amendment, one that offers the prospect of real long-term and effective solutions, that shows the Chinese and the world community that we are serious about solving this problem over the long-haul, and that tells this and subsequent Administrations that they will be held accountable.

Today we have an opportunity to make a difference. The Atlanta Journal Constitution wrote today that “we have a trade problem with China. But Georgians will pay dearly if Congress keeps taking the wrong approach to solving it.”

I could not agree more. But I would say it’s not just Georgians who will pay dearly, but all Americans. I urge my colleagues to make the right choice today, to vote against cloture and support my amendment.

Thank you Mr. President.
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