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2005 Ron Paul Chapter 90
Ron Paul’s Congressional website
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HON. RON PAUL OF TEXAS
BEFORE THE US HOUSE OF REPRESENTATIVES
July 26, 2005
Statement on HR 3283, the United States Trade Rights Enforcement Act
2005 Ron Paul 90:1
Mr. Speaker: I rise in strong opposition to this legislation. Isn’t it
ironic that
the proponents of “free trade agreements” like CAFTA are lining up
squarely
behind a bill like this that threatens a trade war with China, and at
the least
calls for the United States to initiate protectionist measures such as
punitive
tariffs against “subsidized” sectors of the Chinese economy? In
reality,
this bill, which appeared out of the blue on the House Floor as a
suspension
bill, is part of a deal made with several Members in return for a few
votes on
CAFTA. That is why it is ironic: to get to “free trade” with Central
America
we first need to pass protectionist legislation regarding China.
2005 Ron Paul 90:2
Mr. Speaker, in addition to the irony of the protectionist flavor of this
bill, let
me say that we should be careful what we demand of the Chinese
government. Take
the demand that the government “revalue” its currency, for example.
First,
there is sufficient precedent to suggest that doing this would have
very little
effect on China’s trade surplus with the United States. As
Barron’s
magazine pointed out recently, “the Japanese yen’s value has more than
tripled since the breakdown of the Bretton Woods system, yet Japan’s
trade
surplus remains huge. Why should the unpegging of the Chinese yuan have
any
greater impact?”
2005 Ron Paul 90:3
As was pointed out in the
Wall Street Journal
recently,
with
the yuan tied to several foreign currencies and the value of the dollar
dropping, China could be less inclined to purchase dollars as a way of
keeping
the yuan down. Fewer Treasury bond purchases by China, in turn, would
drive bond
prices down and boost yields--which, subsequently, would cause
borrowing costs
for residential and some corporate customers to increase. Does anyone
want to
guess what a sudden burst of the real estate bubble might mean for the
shaky US
economy? This is not an argument for the
status quo
, however,
but rather
an observation that there are often unforeseen consequences when we
demand that
foreign governments manipulate their currency to US “advantage.”
2005 Ron Paul 90:4
At
the very least, American consumers will immediately feel the
strengthening of
the yuan in the form of higher US retail prices. This will
disproportionately
affect Americans of lower incomes and, as a consequence, slow the
economy and
increase the hardship of those struggling to get by. Is this why our
constituents have sent us here?
2005 Ron Paul 90:5
In
conclusion, I strongly oppose this
ill-considered and potentially destructive bill, and I hope my
colleagues will
join me in rejecting it.
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