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Michael Michaud

A Missed Opportunity to Protect our Workers and Help our Economy
By Mike Michaud
Sep 3, 2010 - 5:23:02 PM

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According to the U.S. Department of Labor, Labor Day is dedicated to the social and economic achievements of American workers. It constitutes a yearly national tribute to the contributions workers have made to the strength, prosperity, and well-being of our country.

So many workers from so many different backgrounds and trades make up our state's workforce. They are some of the most talented and dedicated in the world. But their livelihoods are being threatened by foreign government practices like industry subsidization and currency manipulation.

Our government has a process of dealing with these foreign practices that allows U.S. companies to make their case when they see unfair competition in the marketplace from foreign companies and governments. If a U.S. company's petition is found to have merit, tariffs can be placed on goods from foreign companies that don't play by the rules. And that's just what happened back in April of this year, when the Department of Commerce found that China was directly subsidizing its paper industry. This finding was a result of a petition filed by paper companies and workers, including Sappi Fine, which has mills in Skowhegan and Westbrook, and NewPage, which has a mill in Rumford.

This finding had an immediate and important impact. For example, if Gold East Trading Company in Hong Kong, which received a tariff rate of 30.82 percent, shipped coated paper from China worth $1 million to the U.S., the importer would be required to pay a tariff of $308,200 on the $1 million worth of merchandise. This is clearly a significant win for our businesses and their workers.

But this was just the first part of the petition that was filed. The other part focused on China's practice of purposely undervaluing their national currency, which gives Chinese exporters an enormous price advantage. Having the Department of Commerce find that this currency manipulation is an additional subsidy would have provided even more help to our domestic paper makers by further limiting the cheap Chinese paper flooding our market.

Unfortunately, on September 1, just a few days before the Labor Day holiday, workers in the paper industry in Maine and throughout the country were given some bad news - the Department of Commerce decided not to investigate China's currency manipulation as a subsidy.

I am deeply disappointed in the Administration's inaction on the China currency issue. Commerce's decision means they will not evaluate the effects of China's currency manipulation on U.S. paper manufacturers, even though it is clear China's undervalued yuan puts these American businesses at a competitive disadvantage.

The Administration's inaction on China's currency is particularly troubling given the state of the U.S. economy and the fact that China undeniably undervalues the yuan to its economic advantage. In an economic downturn of this magnitude, it is crucial that the federal government do everything it can to protect our businesses from unfair trade practices.

From my time as a paper mill worker, I know firsthand the consequences of unfair trade practices. The paper mill I worked in for nearly 30 years shut down soon after I was sworn in as a member of Congress because our foreign competitors don't play by the rules. Communities in Maine and across the country that depend on the paper industry for their livelihoods need the Administration to address all unfair foreign subsidies with every available resource.

Addressing China's currency manipulation must be a priority, not just for the sake of the paper industry but for our entire economy. Because the White House has refused to take action to level the playing field with China, it is absolutely imperative that Congress do so as soon as it returns. Strictly enforcing our trade laws and making sure unfair, subsidized imports don't flood our market to the detriment of U.S. companies is the least we can do for our workers. Those that helped found Labor Day and celebrate the first observance of it in 1882 would look at this as a no brainer and expect nothing less.

Mike Michaud

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