The National Retail Federation urged the U.S. Senate to reject China currency legislation scheduled for a procedural vote this evening, saying the measure could result in the loss of U.S. jobs.
“This misguided legislation could turn out to be the opening salvo in a trade war with China,” NRF Vice President and International Trade Counsel Erik Autor said. “The gains in jobs that could be seen are minimal at best, and billions of dollars in trade and employment at American companies that do business with China would be put at risk. It would do nothing to reduce the trade deficit because trade would simply move to other Asian countries.”
The Senate is scheduled to vote tonight on whether to take up S. 1619, the Currency Exchange Rate Oversight Reform Act, sponsored by Senator Sherrod Brown, D-Ohio. The bill is intended to pressure China to move more quickly to allow its currency, the yuan, to float more freely in the world currency market. It would use countervailing duties and antidumping measures as leverage against China, but Autor said government estimates are that it would impact only about $120 million worth of the more than $300 billion in annual trade with China, far from enough to have much effect.
“This legislation would likely violate World Trade Organization rules, allowing China to retaliate against U.S. companies doing business in China,” Autor warned. “China could take official moves such as challenging the United States at the WTO, filing trade actions against U.S. exports, or unofficial moves such as slowing down license applications or buying Airbus jetliners rather than Boeing.”
NRF has long argued that restrictions on trade with China only shift retail sourcing to other foreign suppliers because many of the goods in question are no longer made in the United States.
NRF agrees that the yuan should be allowed to float more freely. But rather than unilateral legislation, NRF believes the currency issue is best resolved through multilateral and diplomatic channels such as the G-20, the International Monetary Fund and the U.S.-China Strategic and Economic Dialogue.
NRF President and CEO Matthew Shay is scheduled to travel to China next month as part of a delegation of U.S. retailers who will participate in the Canton Fair in Guangzhou and work to deepen ties with Chinese counterparts.
As the world's largest retail trade association and the voice of retail worldwide, NRF's global membership includes retailers of all sizes, formats and channels of distribution as well as chain restaurants and industry partners from the United States and more than 45 countries abroad.
In the United States, NRF represents an industry that includes more than 3.6 million establishments and which directly and indirectly accounts for 42 million jobs – one in four U.S. jobs. The total U.S. GDP impact of retail is $2.5 trillion annually, and retail is a daily barometer of the health of the nation's economy.
National Retail Federation
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