Major Issues in International Trade Currency manipulation China and other Asian countries keep the value of their currencies artificially low to make their exports cheaper and imports more expensive Subsidies China has provided billions of dollars in subsidies, directly and indirectly, to its steel industry Attempts to weaken the trade laws Multinational corporations that want to be able to rely on dumped and subsidized merchandise Climate change Some solutions would encourage U.S. manufacturing to move to China and elsewhere, leading to greater greenhouse gas emissions

U.S. Dollar per Chinese Yuan Exchange Rate Source: Pacific Exchange Rate Service

Illegal and Abusive Subsidies Discounted Land Costs Discounted Energy Costs Low Cost Loans Debt Forgiveness Lack of Environmental Compliance

Chinese Steel Production 1996-2010 Estimated 647 mmt by 2010 Total Production of Crude Steel – International Iron & Steel Institute (IISI), Steel Statistical Yearbook 2006

U.S. Trade Deficit 1997-2007 China will account for over 30% of the U.S. Trade Deficit this year! 2007 projection based on monthly average through July 2007. U.S. Trade in Goods with World (Seasonally Adjusted) in Billions of Dollars through July 2007 (remainder of 2007 projected); U.S. Census Bureau

Seasonally Adjusted Figures. For Data, see Document #926177. Source: U.S. Census Bureau Seasonally Adjusted Figures. For Data, see Document #926177.

Ohio Manufacturing Jobs bls: http://data.bls.gov/PDQ/servlet/SurveyOutputServlet Nearly One of Every Four Ohio Manufacturing Jobs Has Been Lost in the Last Decade.

The Multinationals’ View Large multinational manufacturers and trading companies (“MNCs”) generally oppose any strengthening of the trade laws Their chief focus is maximizing worldwide profits, not achieving maximum production and employment in the United States These companies have a vested interest in bringing dumped and subsidized imports into the United States Because of their size, they have substantial political clout

U.S. - China Direct Investment (2000 – 2006) $22.2 Billion U.S. direct investment position abroad. The value of U.S. direct investors’ equity in, and net outstanding loans to, their foreign affiliates. The position may be viewed as the U.S. direct investors’ net financial claims on their foreign affiliates, whether in the form of equity (including reinvested earnings) or debt. $554 million Source: The U.S. Bureau of Economic Affairs, Direct Investment, Direct Investment Position on a Historical-Cost Basis

Helpful Federal Legislation Ryan-Hunter, H.R. 782 Applies the subsidy laws to China, makes currency manipulation a countervailable subsidy, and bars China from obtaining more votes in the IMF until it ends currency manipulation. Bunning - Stabenow S.796 Sister Bill of Ryan-Hunter Schumer, Grassley, Bachus, Graham S.1607 Very complex currency bill that has teeth to address ‘misalignment’ but allows wiggle room for Treasury and President to over ride. Very creative play on the dumping laws. Most likely to succeed. Dodd – Shelby S. 1677 Requires Treasury to label China a ‘currency manipulator’. Treasury will not do this. Removed intent from the label and addresses monetary policy. Rockefeller, S.364 Omnibus bill that sharpens trade laws. Davis – English H.R. 1229 Clarifies that subsidy laws can apply to NME.