But the measure falls woefully short on currency manipulation.
No country should be able to unfairly benefit from trade at our expense. And American workers and businesses should have meaningful tools to provide relief from injury.
Congress took a step in the right direction on Wednesday as key Members of Congress announced a deal on the Customs and Enforcement bill. However, they didn’t go as far as some — including us here at the Alliance for American Manufacturing (AAM) – would like.
The bill provides a package of reforms to the way goods are treated and tracked as they enter our market. Overall, it’s a mixed bag – with some really excellent new trade enforcement tools, but also with a notable omission of language to fight currency manipulation. Like the bill, reactions on and off the Hill have been mixed.
Here’s a roundup of what’s in… and what’s out. First, on the positive side of the ledger…
Duty evasion. The bill includes long overdue reforms to the Customs and Border Protection (CBP) processes for handling allegations of evasion of our trade laws. Foreign dumping, subsidies and other unfair trade practices result in great harm to American workers and businesses, who often must resort to utilizing our trade remedy laws as the only path to gain relief.
To add insult to injury, the same foreign companies that have already been found guilty of unfair trade frequently employ deceptive schemes to avoid enforcement measures applied by our government. In this regard, unfair trade orders – often those involving Chinese products – are blatantly skirted through misclassification of merchandise, transshipment, and other forms of evasion.
The result is that our workers and manufacturers are denied the relief to which they are entitled and they continue to suffer injury by reason of foreign unfair trade. With the inclusion of the ENFORCE Act, CBP will now operate under deadlines and with new tools to investigate and fight evasion claims.
Markings. The bill also ensures that imported castings products – things like manhole covers, lamp posts and fire hydrants – that are sold in public procurement markets and paid for with taxpayer funds will be clearly marked with their country of origin for the public to see “in a location such that it will remain visible after installation.” This increased transparency will cut down on inconsistent and deceptive markings that mislead the public and also make it more difficult to apply Buy America preferences.
Enforcement funding. The bill creates a new Trade Enforcement Trust Fund to investigate and fight unfair trade, capitalized with up to $15 million of collected duties from trade cases each year. These new resources will help monitor the practices of foreign countries and, hopefully, put the U.S. in a better position to respond to unfair trade.
Trade surges. The bill also makes data on surges of imports available for the public to view on a website. We’ll be keeping track of this as it comes online and will let you know what we’re seeing.
While we noted that the package includes some positive reforms, there is also a very disappointing omission – one that will continue to give cheats like China a green light to take advantage of U.S. companies and American workers.
Currency manipulation. The final deal on the Customs bill does NOT include language from the Senate bill to provide U.S. companies and American workers with relief when foreign governments intentionally devalue their currency to gain a trade advantage. Instead, the bill will include weak provisions intended to draw more attention to currency manipulation, but without the mechanisms needed to give American manufacturing a level playing field.
Currently, our businesses and workers have absolutely no recourse against the damage caused by foreign currency manipulation. Under every recent administration, foreign governments like China and Japan have been free to tilt the playing field in their favor by rigging their currency, making their exports cheaper and putting what amounts to a hidden tax on American products exported into their market. The result has been massive trade deficits with China, reaching an all-time record of $343 billion in 2014. And the trade picture is even worse in 2015, with the bilateral U.S.-China trade deficit on track to break the 2014 mark.
China intervened in the exchange rate markets as recently as August, with a 4 percent devaluation in the yuan. And, in September, our monthly trade deficit with China reached a record $36.3 billion. Other nations are taking notice. Vietnam quickly followed China’s actions with its own devaluation of its currency in August. South Korea and Japan, too, have freely devalued their currencies in the past.
While the bill is being criticized by some for its omission of currency manipulation language, others are praising the new tools to fight evasion of trade laws. The House and Senate are expected to vote on the deal in the coming days. We’ll keep you updated on how it all shakes out.