July 25, 2007

Chairman Dorgan, Ranking Member DeMint, and Members of the Subcommittee, thank you for inviting me to testify today on behalf of the 1.4 million union members of the International Brotherhood of Teamsters on this important issue.

Ideally, trade and globalization policies should be used as a tool to advance the priorities of the American people, American foreign policy and our national security interests.

In reality, U.S. trade policies have achieved the opposite effect, especially with respect to trade with China.

Visit to China
I would like to briefly discuss my fact-finding visit to China with Change to Win in May.

My clearest impression was that economic growth is the top priority for the Chinese government.

We visited the Yangshan Deepwater Port and Container Terminal, which is by some measures the second largest port in the world.

The Port management and union welcomed us by advising that they had set a world production record the prior evening in our honor.

We were briefed on large-scale highway projects, bridges, tunnels, electric generation plants, dams, and railways. Parts of Beijing seemed like one big construction project.

We were supposed to see a drastic improvement in workers’ rights in China according to PNTR supporters.  Unfortunately, this has not been the case.  In fact, increased trade and investment have only promoted the continuation of workers’ rights violations, and rising worker unrest.

We had extensive discussions regarding the recently approved reforms to the Contract Labor Law. These modest reforms were proposed to address the widespread exploitation of workers in China.

I was extremely disappointed to learn that US companies actively opposed these modest reforms.

US multinational corporations have resisted these changes and have even been successful in weakening the modest reforms.

An important action that Congress can immediately take to remove any incentive a country may have to manufacture and import goods made under terrible working conditions, is to pass S. 367, the Decent Working Conditions and Fair Competition Act, introduced by Senator Dorgan.

Also, we must demand that any future Administration accepts a Section 301 petition on labor rights in China.  If China does not comply with basic internationally recognized worker’s rights, the U.S. should pursue remedies against China.  It is as simple as that.

Current U.S. Trade Policies with China Hurts U.S. Workers
In 2000 when China PNTR passed, I said it then and I say it now -- China PNTR has nothing to do with access for our U.S. businesses to sell goods to China, and everything to do with moving U.S. companies and jobs out of the U.S. and into China.

Almost 60 percent of China’s exports come out of foreign-invested firms, not Chinese firms. And yet we have laws on the books that provide tax preferences for companies to move offshore.  These preferences must be eliminated.

Proponents of China’s entry into the WTO claimed that it would create jobs in the United States, increase U.S. exports, and improve the trade deficit with China.

We have seen the opposite occur.  In fact, we have seen the closure of thousands of U.S. factories and the decimation of our manufacturing base.

The U.S. trade deficit with China has increased from $50 billion in 1997 to $235 billion in 2006, an increase of $185 billion.

This dramatic increase in the trade deficit with China has displaced production that could have supported more than 2 million U.S. jobs.

U.S. Must Enforce and Strengthen Trade Laws

The problem we have with China is not only that we have a one-way trade relationship, but there is a disregard of the rule of law and international commitments that have been made, and a lack of enforcement on our part.

Since China entered the WTO, it has consistently refused to grant access to its markets, and has done so in a way that one would call cheating.

The U.S. government has allowed the cheating to occur by never utilizing the legal action we have available to address illegal subsidies, dumping, dangerous imports, and currency manipulation.

The U.S. government should address China’s refusal to fully and faithfully implement its WTO commitments.  Also, before any additional preferences are given to China or any other country in future WTO or Doha negotiations, countries must live up to and implement their existing promises.

China Currency
Foreign ownership of U.S. debt has reached more than $3 trillion, a dangerous level that is another potential threat to our national security.

China alone holds $353.6 billion of U.S. Treasury securities.  Conceivably, they could cash out anytime and leave us in a financial crisis.

Unfortunately, some have used this as a reason to not enforce existing trade laws, specifically China’s undervaluing of its currency.

Our indebtedness to China should not delay efforts to offset trade imbalances aggravated by exchange-rate misalignment of the undervalued yuan (YOO-ANN).

This enables Chinese exporters to gain up to a 40 percent price advantage over their competitors in the U.S. domestic industry.

In essence, China’s undervalued yuan is effectively a 40 percent tax on all U.S. agriculture and manufacturing exports and a 40 percent subsidy for their exports to our market.

The Teamsters believe that it is imperative that Congress passes the Stabenow-Bunning-Bayh-Snowe bill, S. 796, and its counterpart in the House, the Ryan-Hunter bill, H.R. 782.

These bills recognize that undervalued exchange-rate misalignment by China or any other country is prohibited under U.S. and international law, and ensures that finally action will be taken.

Food and Product Import Crisis
Food imports are more than 4 times greater today than what they were in 1996.

I care about this issue as a consumer, and as the President of a union that has food processing workers and farm workers.

The United States government has not done enough to keep dangerous Chinese products from entering the U.S.

Our FDA inspects less than 1 percent of imports.  That means that 99 percent of our imports are entering our nation unmonitored.

We need to increase inspections, and we need to ensure that shipments of food, consumer products and ingredients are more readily tested.

Congress needs to pass legislation by Senator Brown and Senator Durbin that gives the FDA the authority to approve or disapprove of countries eligible to import into the U.S.

The U.S. government has a responsibility to its people to ensure the safety of food and product imports.

Conclusion
It is not that the Teamsters Union or the American people are against trade, it’s that our current globalization policies have failed and we see it everyday.

Once we see that the playing field is leveled, the right rules are in place and enforced, and jobs are created, you can be guaranteed that the American people will support expanded trade.

It is China’s right as a nation to develop and gain economically, but it is our right and duty as a nation to ensure that if we are to continue to have expanded trade with China, we must enforce our trade laws and implement new rules and protections necessary for our own economic development.

We need to demand access to their markets because so far, it is just one-way trade.  I like the Chinese and wish them well, but I love and fight for U.S. workers and it is time that this Administration and all of us in this room take control of our globalization policies to ensure that our workers benefit and our families are kept safe.

Thank you again for the opportunity to testify.  I look forward to your questions and comments.