Statement by Bill Hickey
Lapham-Hickey Steel Corporation
September 8, 2004
Good morning. My name is Bill Hickey, and I am president of Lapham-Hickey Steel Corporation of Chicago.
Lapham-Hickey operates five carbon and stainless steel service centers in four Midwestern states, and because we do business in the industrial heartland of this country, we know from direct experience how devastating China’s currency policies have been to the U.S. manufacturing base.
Our case is relatively simple. China ties the value of its currency in an inflexible exchange rate to the U.S. dollar. This means that no matter how rapidly the Chinese economy grows, and no matter how large the U.S. trade deficit with China becomes, the value of the yuan remains the same. The value of most currencies is set by market forces. But because the value of the yuan is artificially manipulated by Chinese policy, it is our belief, and the belief of most experts who have studied this situation, that the yuan is undervalued by at least 40%.
China’s government knows this, and China fully understands the tremendous mercantile advantage gained by artificially making every Chinese export 40% cheaper than it should be. In a world that decries government subsidies, the size of this de facto 40% subsidy boggles the mind.
That 40% advantage also works against U.S. exports to China. How can a U.S. manufacturer, who is already competing against extraordinarily low Chinese labor costs and closed Chinese markets, expect to overcome, as well, a manipulated currency that makes U.S. exports 40% more expensive, in real-world terms, than they should be?
The U.S. government has frequently called for China to establish a level playing field when it comes to global trade. We, like this administration and the Clinton administration alike, believe in free and fair trade. We think that means that China, like all other members of the World Trade Organization, like the U.S., must live up to the rules of free and fair trade. Not just some of those rules, but all of them.
The administration believes China is progressing towards some kind of eventual revaluation of the yuan. We members of the China Currency Coalition look at the same facts and conclude that if there is progress, it is almost imperceptible. We believe China is, in fact, stalling on the currency issue.
We, therefore, are filing this Section 301 petition because every day China drags its feet on this… and every day we fail to enforce our trade laws… is another day that exacts a terrible penalty on U.S. manufacturing. After the loss of more than two million jobs… the shutdown of thousands of factories… the loss of an immense tax base… isn’t it time for us to show a little backbone on this issue?
The members of the China Currency Coalition represent a very diverse base of manufacturers and those, like me, who are part of the manufacturing supply chain. We have watched as the administration has tried, over the last year, to persuade China to revalue its currency. We appreciate those efforts…but we do not see that they have been successful. If China is moving, it is not moving fast enough. With today’s filing, we call on the administration to act to defend our trading rights, and our industrial base.