Rescuing America from Bush’s Failed Trade Policy

The Democratic majority in the 110th Congress must lead our country to balanced trade accounts. We must erase the swelling U.S. trade deficit that erodes our economy, our good jobs, and our national security while the Bush administration watches idly. We must confront the staggering trade imbalance with China, Japan, the Middle East, and so many others. As the trade deficit rises, the value of the dollar falls, and our dependence on foreign creditors increases. Democrats must reclaim our economy for the American people.

Meanwhile, the Bush Administration clings to a failed policy. The trade deficit has doubled since George W. Bush took office. The deficit was $375 billion in 2000 and will almost certainly exceed $750 billion this year. Though the President says America must break our “addiction to imported petroleum,” under his Presidency America is importing one billion more barrels of oil per year.

As companies lay off workers and move abroad, and as foreign firms buy American assets, the trade deficit has ballooned to $773 billion from November 2005 to the most recently released numbers from October 2006. China’s share is even more bloated: a $24.4 billion trade gap for the month of October alone. This year’s trade deficit will be the largest in U.S. history.

In fact, the trade deficit with undemocratic China has expanded at a faster pace than our deficit with any of our other major trading competitors. It nearly doubled from 2001 ($83.1 billion) to 2004 ($162 billion), and bulged to more than $200 billion last year. In 2005, we held a deficit with Japan of $82.7 billion and with Mexico more than $50 billion.

All the while, there is a deliberate effort on the part of nations like China to keep our trade relationship one-sided and far from reciprocal. Beyond turning its back to the significant human rights concerns, which lower firms’ expenses and create a “race to the bottom” for workers’ wages around the world, the Chinese government actively pursues a trade policy that harms America and our workers.

China vindictively manipulates the Yuan, undervaluing its currency compared to the dollar by at least 15% and perhaps as much as 40%. Yet China accumulated $819 billion in foreign exchanges, much of it in dollar denominated reserves, at year-end 2005, a sign that Chinese currency manipulation is hardly needed to foster economic security.

Furthermore, the Chinese government continues to subsidize state-owned enterprises which are responsible for a large percentage of Chinese exports to the U.S., although this practice is against World Trade Organization regulations. Nations like Japan keep their marketplace largely closed, and undemocratic countries like Saudi Arabia have achieved economic edge by our over reliance on their petroleum. And the continued use of the value-added tax as an unfair trade subsidy by our trade competitors place our nation at a huge disadvantage amounting to millions more each year.

There should be free trade among free people. Economic concerns too often transform into national security concerns. We have witnessed government-funded businesses also attempt to buy American companies, the most notable example being Unocal’s withdrawn bid to buy ChevronTexaco. Meanwhile, U.S.-owned companies are barred from ownership of Chinese firms.

Instead of taking a passive approach, or no approach at all, the United States must stand up to managed economies and take an active, deliberate role in the fight for our economic and national security. I call upon my colleagues in the 110th Congress to address our failing trade policy and to fight President Bush’s appeasement and acquiescence which is tantamount to economic surrender.