Alexander: Senate Majority’s China Currency Bill Would “Punch China in the Nose … and History Teaches Us China Will Punch Right Back”

Says, “[This] is not how the world's strongest economy, the United States of America, should conduct itself. Such legislation is a sign of weakness or lack of self-confidence or defeatism that is not worthy of the United States of America.”

Posted on October 5, 2011

“[Starting] a couple of weeks ago … we should have been debating the trade bill, the jobs bill, and we could have been offering the Republican proposals we have to encourage trade, to give this President and future Presidents new trade authority, to reform the tax law, and to have a timeout on regulations that are throwing a big, wet blanket on the economy, making it more expensive and harder to create new jobs in America. That would have been the kind of debate we could have had on the Republican proposals we believe would make a difference in this urgent jobs situation which has given us 9 percent unemployment for a longer period of time than at any time since the Great Depression.”

– Lamar Alexander  

WASHINGTON – In a speech on the Senate floor today, U.S. Senator Lamar Alexander (R-Tenn.) said that at a time of prolonged 9 percent unemployment, when the Senate could work on ratifying three trade agreements to “avoid losing 350,000 jobs or create 250,000 jobs,” the Senate Majority Leader is choosing to debate S. 1619, the Currency Exchange Rate Oversight bill, legislation aimed at leveling economic sanctions on China for its currency practices, which Alexander says will “escalate a trade war that no one will win.”

“It will give a punch in the nose to China, our second largest trading partner, our third largest export market, our fastest growing export market, and the second largest economy in the world. History teaches us what will happen. We saw that during the Great Depression. Perhaps it was the cause of the Great Depression. We remember the Smoot-Hawley tariff, the trade war that developed, the reciprocal punches in the nose that countries gave to themselves over trade, plunging the world into a depression.”

Alexander continued: “What should we do instead? Of course, there is legitimate concern about the way China values its currency. The administration should work with China to change that. China should accelerate the appreciation of its currency. But what else should the United States of America do? We might take a lesson from history.

“I remember 30 years ago, when I was just beginning my time as Governor of Tennessee, China was not the country in the news. It was Japan. There were books written: Japan, No. 1. The United States was, as it is today, the world's largest economy, but everybody was predicting: Watch out for Japan. Japan is becoming No. 1. The United States cannot keep up with Japan, it was said. …. What did we do? Well, we did not act defeatist. We did not play games. We did not act as if we were the fifteenth largest economy in the world instead of the first. We asserted ourselves. We went to Japan and said to them: Make in the United States what you sell in the United States and take down your trade barriers so we can sell in your country what we make in ours.

“I went there myself. I remember vividly going to Tokyo in 1979, in November. I met with the Nissan officials. They were considering locating a manufacturing plant in the United States. At that time, they were making all of the Nissan cars and all the Nissan trucks in Japan that they sold in the United States. But they wanted to be in this market, which was and is the most profitable automobile market in the world. So we said to them: Make here what you sell here. And they did. They came to the United States. And where are we 30 years later? Nissan is saying to us that they have operated for 25 years now the most efficient automobile and truck plant in North America, and they are going to be making 85 percent of what they sell in the United States here in the United States.

“Nothing has done more to create higher incomes and better jobs in Tennessee than the arrival of Nissan and the Japanese industry, followed by the American auto industry, in our state over the last 30 years. That is how a strong and confident country asserts itself in world competition. That is not just true with automobiles, it is true with many other manufacturing companies that have come to our State from Japan and from other places. That is exactly the way we ought to deal with China.”

A transcript of his floor speech follows:

“Madam President, our country has endured a 9-percent unemployment rate for a longer period of time than at any time since the Great Depression. Yet, unfortunately, the Democratic leader is reluctant to address this problem of joblessness in a serious way.

“One way to address it would have been to take the three trade agreements, which were negotiated 4 and 5 years ago -- one with Colombia, one with South Korea, one with Panama -- and send them up to the Senate and House and let us ratify them and let us move ahead to avoid losing 350,000 jobs -- that is an estimate of the U.S. Chamber of Commerce -- or create as many as a quarter of a million jobs -- that is the estimate of the White House. Yet those three trade agreements had been sitting on the President's desk since the day he took office nearly 3 years ago. They arrived yesterday -- or Monday, I suppose it was -- and they are here waiting for us to act on them.

“Every day we do not act on them delays the day when we avoid losing 350,000 jobs or create 250,000 jobs. That has been the case every day for the last nearly 1,000 days. That would be a good way to address the jobs issue, but we have not. Instead, we had the President going around the country during the summer blaming Republicans for not acting on the three trade agreements when, in fact, the President had not sent them to us. There is no way the Congress can act on them until the President forwards them, which he now has. And if he has, why are we not debating them today? That would be a good way to deal with the jobs issue.

“Here is another example. On September 8, the President came before the Congress and proposed his jobs bill. He said, if I counted correctly, and I was sitting respectfully in the second row, almost in the front row -- I think he said as many as 17 times: Pass this jobs bill now. And if that were not enough, he has said it almost every day since then. The Republican leader mentioned it a few times.

“He was in Dallas yesterday. ‘Pass this jobs bill now; I am ready to enact it,’ said the President of the United States.

“Well, it has been sitting there on the Democratic leader's desk for the last couple of weeks, ever since the President sent it up here. He spoke about it on September 8.

“The person in this body whose job it is to set the agenda is the Democratic leader, a member of the President's own Democratic Party. Why doesn't he bring it up? So yesterday the Republican leader said: ‘I will show courtesy to the President. I will ask the Senate to do what the President has asked that we do, which is pass this jobs bill now,’ and the Democratic leader objected.

“So here, for the second time, we have the President running around the country saying one thing, and then we try to do it, and his leader in the Senate objects. What are we doing instead? Well, a couple weeks ago the Democrats manufactured a crisis over disaster aid when we could have been debating the trade bill, the jobs bill, and we could have been offering the Republican proposals we have to encourage trade, to give this President and future Presidents new trade authority, to reform the tax law, and to have a timeout on regulations that are throwing a big, wet blanket on the economy, making it more expensive and harder to create new jobs in America. That would have been the kind of debate we could have had on the Republican proposals we believe would make a difference in this urgent jobs situation which has given us 9 percent unemployment for a longer period of time than at any time since the Great Depression.

“So now this week, what are we doing? Well, we are debating a piece of legislation. The Democratic leader has decided this is the important piece of legislation to deal with jobs this week. And what will it do? It will give a punch in the nose to China, our second largest trading partner, our third largest export market, our fastest growing export market, and the second largest economy in the world. History teaches us what will happen. We saw that during the Great Depression. Perhaps it was the cause of the Great Depression. We remember the Smoot-Hawley tariff, the trade war that developed, the reciprocal punches in the nose that countries gave to themselves over trade, plunging the world into a depression.

“So here we are in a fragile moment, when headlines are saying we may be about to dip into a second recession, and what do we do? The Democratic majority says their best idea about creating jobs is to punch in the nose our second largest trade partner, our third largest export market, and our fastest growing export market, even though we know exactly what they will do to us. History teaches us they will punch us right back in the nose, and the result will be a trade war, which destroys jobs rather than creates jobs.

“Such legislation as that now pending on this floor is not how the world's strongest economy, the United States of America, should conduct itself. Such legislation is a sign of weakness or lack of self-confidence or defeatism that is not worthy of the United States of America.

“In Tennessee, we see the advantages of trading with the world, including with China. China is our third largest export market, after Canada and Mexico. Our leading exports are chemicals and agricultural products. Tennessee exports to China a total of $1.85 billion, a 43-percent increase over 2009. A little over 7 percent of all of our exports went to China. In Tennessee, 116,000 jobs are related to the export of manufactured goods; 5.3 million jobs in America. At a time of joblessness, why should we be punching in the nose someone to whom we might sell goods and that would create jobs in the United States?

“What should we do instead? Of course, there is legitimate concern about the way China values its currency. The administration should work with China to change that. China should accelerate the appreciation of its currency. But what else should the United States of America do? We might take a lesson from history.

“I remember 30 years ago, when I was just beginning my time as Governor of Tennessee, China was not the country in the news. It was Japan. There were books written: Japan, No. 1. The United States was, as it is today, the world's largest economy, but everybody was predicting: Watch out for Japan. Japan is becoming No. 1. The United States cannot keep up with Japan, it was said. Their autos, their computers, their electronic goods, their other sophisticated goods were going to overwhelm our markets, and we would quickly fall behind.

“There was in the early 1980s a $46 billion trade deficit with Japan. What did we do? Well, we did not act defeatist. We did not play games. We did not act as if we were the fifteenth largest economy in the world instead of the first. We asserted ourselves. We went to Japan and said to them: Make in the United States what you sell in the United States and take down your trade barriers so we can sell in your country what we make in ours.

“I went there myself. I remember vividly going to Tokyo in 1979, in November. I met with the Nissan officials. They were considering locating a manufacturing plant in the United States. At that time, they were making all of the Nissan cars and all the Nissan trucks in Japan that they sold in the United States. But they wanted to be in this market, which was and is the most profitable automobile market in the world. So we said to them: Make here what you sell here. And they did. They came to the United States. And where are we 30 years later? Nissan is saying to us that they have operated for 25 years now the most efficient automobile and truck plant in North America, and they are going to be making 85 percent of what they sell in the United States here in the United States.

“Nothing has done more to create higher incomes and better jobs in Tennessee than the arrival of Nissan and the Japanese industry, followed by the American auto industry, in our State over the last 30 years. That is how a strong and confident country asserts itself in world competition. That is not just true with automobiles, it is true with many other manufacturing companies that have come to our State from Japan and from other places. That is exactly the way we ought to deal with China.

“Our administration can assert itself in a variety of ways about the currency issue. But we should not act as though we are afraid of China anymore than we were afraid of Japan 30 years ago. We should seize this as a moment of opportunity. We should not escalate a trade war that no one will win. We should grow trade in sales and investment in China and urge them to make in the United States what they sell in the United States. If they should do that, that will create jobs here rather than destroy jobs, as history teaches us a trade war will do.

“I hope the Senate will decisively reject the legislation that is being proposed to initiate a trade war with China.”

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