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News from U.S. Senator Olympia J. Snowe
Chair, Senate Committee on Small Business and Entrepreneurship
For Immediate Release: February 23, 2006
Contact: Chris Chichester, 202-228-5843

Snowe Continues Fight Against Unfair Trade Practices
Cites National Association of Manufacturers Report Released Today

WASHINGTON, D.C. - U.S. Senator Olympia J. Snowe (R-ME), Chair of the Senate Committee on Small Business and Entrepreneurship and Co-Chair of the Senate Task Force on Manufacturing, today responded to the National Association of Manufacturers and Manufacturing Institute report The Future Success of Small & Medium Manufacturers, which cited the Chinese government’s unfair trade practices as harming America’s manufacturing base.

“Small and medium manufacturers in Maine and across our nation are fighting to remain competitive with countries such as China that often disregard international laws established to ensure fair trade,” said Senator Snowe.

“Unfortunately, unfair trade practices are exacerbated by illegal currency manipulation, which keeps Chinese goods at artificially low prices, distorting the marketplace and threatening the ability for American goods to be sold at a competitive price. Now is the time for Congress to act to put a stop to China’s currency manipulation - without a response, American jobs will continue to be in jeopardy.”

The NAM report concluded that small and medium manufacturers “. . . must overcome the hurdle of undervalued currencies in some countries. In the case of the China market, some economists estimate that its currency is about 40 percent below its real market value against the U.S. dollar. Currency undervaluation artificially raises prices on all U.S. exports to such countries and lowers prices on exports from these countries to the United States . . . In some sectors in China and other countries, direct and indirect subsidies to local industries give additional unfair advantage over foreign competitors.”

“Last week I wrote Treasury Secretary John Snow to demand the Bush Administration finally take a stand against the Chinese government’s unfair trade practices that are costing Americans their jobs by officially labeling the country a currency manipulator in its April, 2006 report to Congress,” said Senator Snowe. “It is critical that we revitalize our manufacturing base and establish an environment for small manufacturers to grow and create jobs again.”

Senator Snowe released her letter to Secretary Snow immediately after the Department of Commerce reported the annual U.S. trade deficit for 2005 increased 17.5 percent, to $725.8 billion, the highest on record.

Last year Senator Snowe introduced “The Fair Currency Practices Act of 2005” (S.984), legislation to force nations to live up to their international obligations and stop undervaluing their currencies. It has three key provisions. The first would alter the criteria by which the Treasury Department is required to enter into negotiations with foreign countries that it labels as currency manipulators. The second would further clarify the working definition of manipulation under the Exchange Rates and International Economic Policy Coordination Act of 1998. Finally, the Fair Currency Practices Act would instruct the Treasury to undertake an extensive examination of China's trade surplus, with particular attention paid to China's suspect trade data, and report on its findings.

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