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Western Pennsylvania officials, companies join call for currency reform

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The following article by Joe Napsha appeared in the Pittsburgh Tribune-Review here. CPA’s Pennsylvania Chapter Chair, Dave Frengel, is quoted as well.

China’s practice of undervaluing its currency to make its exports cheaper in the United States must be changed for manufacturing to recover from the recession, say Western Pennsylvania officials and companies.

“We want fair trade, not unfair trade. We feel that China has gamed the system to the point that instead of their currency inflating, it continues to go down against the dollar to make their goods cheaper,” said Jeff Pfeifer, CEO of MLP Steel LLC of Scottdale, which makes rods and heavy-duty steel bars at its Laurel Steel and Fayette Steel divisions.

“We continue to see an erosion of our manufacturing base that are our customers, and we’re seeing fewer customers in the U.S.,” said Pfeifer, who has worked in the steel business since 1972.

The Currency Reform for Fair Trade Act of 2010, which is aimed at eliminating currency manipulation by China, was attached this week to a Senate bill to extend tax cuts implemented under President George W. Bush.

By passing the bill, the Commerce Department could slap a levy on imports from countries that the government determines has undervalued their currency against the U.S. dollar by an average of 5 percent over an 18-month period.

“They game the system in every way possible. China is cheating in a variety of ways,” U.S. Rep. Jason Altmire, D-McCandless, told about 55 business representatives this week at an event sponsored by SMC Business Councils, a Churchill organization representing about 5,000 businesses in the state.

Passage of the bill is important to change the direction of America’s trade policy, to globalize trade in a way that is fair to all countries, said David Frengel, government affairs director for Penn United Technologies Inc. of Saver, a precision machining company.

“We sent a signal across the world that we need to have a real conversation on how to do that,” to change the direction of trade policy, Frengel said.

Frengel is a member of the Coalition for a Prosperous America, a nonprofit that has pushed passage of the currency reform legislation in Congress.

House approval of the bill in September has changed the dialogue about trade issues, challenging how China’s currency policy affects trade, he said.

“It sent repercussions throughout the world … the day after it was passed,” Frengel said.

Gilbert Koedel, an advisory board member for Bon Tool Co. of Richland, which makes tools for construction trades, questioned how effective the legislation would be toward reducing trade deficits or boosting manufacturing. Bon Tool has an engineering operation in India and a commercial sourcing office in Shanghai, China.

“It’s a short-term thing. It’s not going to remedy the problem. It going to cost the consumer more with the tariffs because prices will go up,” Koedel said.

Manufacturing in the United States would be better served by reducing its cost structure problem, Koedel said. Costs related to health care, regulations and labor, among others, have more of an impact on American manufacturers competing in the world, he said.

The U.S. Chamber of Commerce does not believe the currency reform bill will achieve the goal of getting China to move rapidly toward a market-determined exchange rate, spokesman David Natonski said.

The chamber joined 35 other trade associations in stating that “this legislation will do more harm than good to job creation and economic growth at a time when we need both dearly.”

One Response to “Western Pennsylvania officials, companies join call for currency reform”

  1. Michael says:

    I see lots of whining from the USA about the currency control by the Chinese government. All I see is the USA whining and complaining and a lot of posturing and rhetoric from inflamed politicians. What I don’t see is some serious consideration on how to work with China to develop a mutual win-win solution. The lazy solution is to try to pressure China into something that may benefit the USA while wreaking havoc at home – not gonna happen.

    So we can be lazy and point fingers and try to incite the mobs or we can get off our fat lazy rumps and use our lazy TV sodden brains to think of a win-win strategy that benefits both nations – actually do some real work. But pointing wagging fingers with incendiary accusatory rhetoric doesn’t work in marriage and it certainly won’t win any points with our allies.

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