CHINA’S CURRENCY IS WHO’S BUSINESS AGAIN? NOT OURS!

I not sure what this means but here I am again disagreeing with Paul Krugman. Prof. Krugman argues in the New York Times that we must act to stop the People’s Republic of China from undervaluing its currency:

For the truth is that U.S. policy makers have been incredibly, infuriatingly passive in the face of China’s bad behavior — especially because taking on China is one of the few policy options for tackling unemployment available to the Obama administration, given Republican obstructionism on everything else. The Levin bill probably won’t change that passivity. But it will, at least, start to build a fire under policy makers, bringing us closer to the day when, at long last, they are ready to act.

I suggest that the Chinese currency issue is none of our business. Who gives us the right to decide what some other country can do with its currency? We have debased our currency since 1913 with the Federal Reserve/fiat currency policies? Should some other nation threaten us with sanctions if we do not adopt the gold standard? That is what the Levin resolution does:

The legislation before us today clarifies that countervailing duties can be imposed to offset the effects of an undervalued currency. Countervailing duties would be available to any U.S. industry that could demonstrate that it has been ‘materially injured’ by imports from the country with the undervalued currency.

It gets worse; we invoke the WTO to force Red China to act:

“WTO rules allow for the application of countervailing duties to offset or neutralize export subsidies. To date, Commerce has refused to find currency manipulation a countervailable export subsidy, for the sole reason that non-exporters (e.g., U.S. tourists in China) benefit from the undervalued currency as well. This is more restrictive and is at odds with WTO Appellate Body rulings that a subsidy can be considered an export subsidy even if it is available in some circumstances that do not involve export.

* * *

“Some argue against action for fear of retaliation by China. Such retaliation itself would be inconsistent with the rules of the WTO. WTO inconsistent retaliation is not a reason to delay pursuit of WTO consistent action.”

I am appalled; we are threatening another nation with a international agency on a matter of internal sovereignty. This is outrageous. We would be outraged if the EU used the WTO to interfere in an internal matter. It has already occurred: The Byrd amendment was an attempt to bring compensation for dumping and subsidies to those hurt by the trade abuse; the EU got the WTO to reject it. Read this press release from the EU (Remember – the EU is NOT our friend!) and ask yourselves what we should do.

That means that distribution of collected anti-dumping and anti-subsidy duties to US companies will continue and distort the conditions of competition on the US market at the expense of imported goods for an undetermined number of years. * * * The EU will now carefully review the details of the compromise reached in Congress and its implications for EU companies. In so doing, the EU will work in close coordination with the other complainants.

We should withdraw from the WTO immediately and stop forcing other nations to change internal policies. Let’s instead stand for national sovereignty and set an example for others to follow if they choose to do so!