China’s currency manipulation directly affects Maine’s economy

By U.S. Rep. Mike Michaud
(D-Maine)
    The renminbi (RMB), or the Chinese yen, is the official currency of China. I am deeply concerned about China’s undervaluation of the RMB and the impact it is having on our economy. It makes it harder for U.S. producers to compete with Chinese products, hampering their ability to contribute to our nation’s economic recovery.
    Congress has recently been active on the issue and has held hearings to further explore options available to us. On April 5th, I submitted testimony to the House Ways and Means Committee on the issue of China’s currency manipulation, detailing how it affects Maine workers and businesses. My testimony centered on the local impact on paper mills owned by Sappi Fine Paper and NewPage Corporation.
    The message I sent was simple: our businesses are being hurt, workers’ livelihoods are being threatened, and we can’t afford inaction any longer.
    NewPage Corporation is the largest coated paper manufacturer in North America and has 10 paper mills in several states, including Maine, and in Nova Scotia, Canada. In 2008 at its Rumford facility, NewPage had to shut down a couple of paper machines and lay off workers as a result of foreign imports. Chinese paper exports to the U.S. are the primary source of new competition that forced NewPage to reduce its paper output in Rumford, and the RMB undervaluation simply makes Chinese paper cheaper than the competing U.S. product.
    Sappi Fine Paper has similarly been forced to scale back their coated paper business over the last several years as a result of the unfair competition from Chinese paper imports. The company still has three mills in the U.S., including two in Maine, but last year had to permanently close its paper mill in Muskegon, Michigan. And in 2003, Sappi Fine Paper had to shutdown its paper machine in its Westbrook facility, laying off 170 employees in the process.
    In paper mill communities, the closure of a mill or a plant is often devastating. I am intimately aware of these local impacts because the mill I worked at for nearly 30 years shutdown soon after I was sworn in as a member of Congress. My friends and family lost their jobs and for the first time in many years didn’t know where their next paycheck would be coming from. If China continues to be able to export its coated paper at a subsidized price, I am very concerned that we will see additional closures and downsizing. That’s why I have strongly supported our paper producers’ efforts to seek a more level playing field.
    While we await a final decision from the Department of Commerce on the petition filed by U.S. producers of coated paper, it’s clear that we must act on the broader issue of currency manipulation so that our nation’s businesses can compete on a more level international playing field. They shouldn’t have to wait to be injured before they seek justice. We should act now to prevent further economic damage.
    Thankfully, more and more lawmakers are waking up to the reality of China’s actions and are standing up to demand a change in U.S. policy. This was made clear on March 15th when 129 Democrats and Republicans signed a letter I wrote to Treasury Secretary Tim Geithner and Commerce Secretary Gary Locke urging them to immediately address the growing problems associated with China’s continued currency manipulation. It was a bipartisan show of force that hadn’t been seen on this issue thus far. In fact, it has been cited on numerous occasions as a key factor that has helped moved this issue forward, both in China and here in the United States.
    In addition, there are bipartisan bills in the Senate and House, which I am cosponsoring, that would address currency manipulation.
    Currency manipulation is a factor nationwide, and here in Maine our paper mills are an unfortunate case study of the problem. In this difficult economic environment we need to do everything we can to protect American jobs. By deliberately undervaluing its currency, China is subsidizing its companies and making it difficult for our businesses to compete. That’s why our country needs to use every tool available to address this issue and level the international playing field. Not doing so will frustrate our economic recovery efforts and further the loss of American jobs and the closures of businesses.
    Whether it’s action taken by the Administration or the Congress, we must act quickly.