It’s still a mystery which Republican will be U.S. Sen. Sheldon Whitehouse’s opponent next year. But if you listen to the freshman Democrat’s rhetoric, it sounds like he’s planning to run against Chinese President Hu Jintao.
Whitehouse has emerged as a tough critic of China’s economic policies – and a self-styled defender of U.S. manufacturing companies – as the 112th Congress gets under way.
“Unfair foreign competition is killing domestic industries,” Whitehouse declared on the Senate floor last month as he introduced his proposed Offshore Prevention Act, which would end a tax advantage companies currently receive when they move a factory overseas.
In an interview last month in his Washington office, Whitehouse said he sees China’s ongoing effort to hold down the value of its currency, the renminbi, as a major contributor to high unemployment in Rhode Island and the U.S. China’s exchange rate is about 20% to 25% below what it would be if it were allowed to float freely, which keeps its exports cheaper, according to the Peterson Institute for International Economics.
Whitehouse is working with his colleagues Chuck Schumer of New York and Sherrod Brown of Ohio to craft legislation that would allow the White House to slap a tariff on Chinese-made goods to correct for its currency’s undervaluation – an idea which is fiercely resisted in some quarters.
“We’ve had a kind of rear guard of ideological free traders who see any interference with trade as a violation of principle, and they start calling people protectionists,” Whitehouse said. “It’s a big group, and they’re sort of pre-wired to go on the offensive when they hear anything that is opposed to them, so you’re instantly in a quarrel with them if you try to address any of these issues.”
Rhode Island Manufacturing Extension Services CEO Leslie Taito, who was Whitehouse’s guest at the State of the Union last month, said local companies were “thrilled” by the senator’s advocacy.
Whitehouse’s pitch about protecting American jobs and boosting U.S. manufacturing has a familiar ring to it; David Cicilline sounded the same themes in his successful bid for Congress last fall, and Whitehouse may be hoping it will work for him, too.
The senator criticized the Bush administration for what he labeled its support for offshoring and its “deliberate decision” to relax immigration enforcement “so there could be a flood of immigrants to drive labor costs down.”
“Thankfully, that’s been ramped back up again” by the Obama administration, he said.
Currency manipulation isn’t the only Chinese policy that drew the ire of Whitehouse and Taito for being harmful to local manufacturers; others they cited included local content rules, which require some parts to be made there, and intellectual property theft.
Obama’s White House may not be on the same page as Senator Whitehouse, though. The Obama administration has resisted calls to get tougher on China, with Treasury Secretary Tim Geithner repeatedly declining to formally label the country a “currency manipulator.”
Nor are Democrats of one mind on these issues. “We’re not a united party on this subject,” Whitehouse acknowledged.
Still, the senator is optimistic that the Obama team is coming around to his view. ”I think they’ve changed a little bit what their China strategy is,” he said, and members of Congress can “strengthen the administration’s hand” by passing legislation targeting the country.
“We provide them an opportunity to say to their counterparts on the Chinese side, ‘Guys, look at the pressure I’m under here,’” Whitehouse said.
(photo: Ted Nesi/WPRI)