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TO URGE PRESIDENT GEORGE W. BUSH AND HIS ADMINISTRATION TO TAKE CERTAIN ACTIONS TO PROHIBIT OR REDUCE THE PRACTICE OF INTERNATIONAL CURRENCY MANIPULATION.
Whereas, Article IV of the International Monetary Fund (IMF) Agreement states that members should "avoid manipulating exchange rates . . . in order . . . to gain an unfair competitive advantage over other members"; and
Whereas, certain East Asian countries have demonstrated a pattern of large scale purchases of foreign exchange, principally in dollars, to keep their exchange rates lower than if they were subject to market forces alone, thereby artificially inflating the value of the dollar; and
Whereas, the total United States trade deficit was approximately $435.7 billion in 2002; and
Whereas, the United States trade deficit increased approximately 18% in 2002; and
Whereas, the United States exports fell 2.7% in 2002 to $972 billion; and
Whereas, approximately $100 billion, or about one quarter to the total United States trade deficit, can be attributed to currency manipulation; and
Whereas, as of 2002, the value of goods imported to the United States from China is five times more than the value of the United States goods exported to China, resulting in a bilateral trade deficit of approximately $103 billion, almost 25% of the total United States trade deficit; and
Whereas, as of 2002, the value of goods imported to the United States from Japan is two times more than the value of the United States good exported to Japan, resulting in a bilateral trade deficit of approximately $70 billion, approximately 16% of the total United States trade deficit; and
Whereas, as of 2002, the value of goods imported to the United States from South Korea exceeded the value of the United States goods exported to South Korea, resulting in a bilateral trade deficit of approximately $13 billion, approximately 3% of the total United States trade deficit; and
Whereas, as of 2002, the value of goods imported to the United States from Taiwan exceeded the value of the United States goods exported to Taiwan, resulting in a bilateral trade deficit of approximately $14 billion, approximately 3.2% of the total United States trade deficit; and
Whereas, currency manipulations have become a significant barrier to United States exports to China, Japan, Taiwan, and Korea, causing prices for Asian goods to fall dramatically thereby preventing exports to export markets; and
Whereas, China, which represents approximately $100 billion of the United States trade deficit for the year 2002, has an artificially low fixed exchange rate that boosts its exports and retards its imports; and
Whereas, Japan, Korea, and Taiwan, which represent another $100 billion of our trade deficit last year, have practiced multiple currency interventions in 2001 and 2002; and
Whereas, East Asian countries represent approximately 47% of the United States trade deficit for the year 2002; and
Whereas, currency manipulation has resulted in a significant depreciation of the Asian currency exchange rate lower than if it were based on market forces alone; and
Whereas, the result of currency manipulation is a larger trade deficit with certain East Asian countries and the loss of United States export-oriented and import-competing jobs; and
Whereas, more than 80% of the United States trade deficit will fall on the manufacturing sector; and
Whereas, since March 1998, manufacturing employment has declined by more than 2.3 million jobs; and
Whereas, between October 1, 2000, and April 30, 2001, more than eighty corporations announced their intentions to shift production to China; and
Whereas, the employment effects of these job losses and production shifts in manufacturing go well beyond the individuals who lose their jobs. Each time another company shuts down operations or moves overseas, it has a ripple effect on the wages of every other worker in that industry and community, through lowering wage demands, reducing the tax base, and reducing or eliminating hundreds of jobs in the related contracting, transportation, wholesale trade, professional, and service-sector employment in companies and business; and
Whereas, more than one in every ten American factory jobs has been lost in the last two years, much of which is directly attributable to export losses and to artificially low priced imports from countries that prevent market forces from determining exchange rates; and
Whereas, the United States record trade deficit and Asia's surging surplus could destabilize the global economy and must be corrected. Now, therefore,
Be it resolved by the Senate, the House of Representatives concurring:
That the members of the General Assembly urge President George W. Bush and his Administration to take the following actions to prohibit or reduce the practice of international currency manipulation:
(1) adopt a clear statement of United States policy that will actively seek to curb the ongoing manipulation of currency to gain an unfair competitive advantage through direct consultations with trading partners and IMF review procedures;
(2) pursue the aforementioned policy within the Group of Seven (G-7) finance ministers, whose membership represents the principal international currencies;
(3) pursue bilateral consultations with targeted currency manipulators;
(4) approach the IMF to seek public reporting of currency intervention and to curtail currency manipulations; and
(5) encourage filing a complaint within the World Trade Organization (WTO) dispute and settlement mechanism against recalcitrant currency manipulators.
Be it further resolved that a copy of this resolution be forwarded to the President of the United States and each member of the South Carolina Congressional Delegation.
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