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A campaign ad for Mitt Romney accuses President Barack Obama of failing to confront China to protect American manufacturing jobs.
"Under Obama, we've lost over half a million manufacturing jobs," the narrator says. "And for the first time, China is beating us. Seven times Obama could have stopped China's cheating. Seven times, he refused."
We’ve looked before at claims about manufacturing job losses and gains under Obama, finding it True that the United States has created over half a million manufacturing jobs in the last two and a half years. (That’s right — the country’s actually gaining now, though not yet by enough to replace the drop in Obama’s early months.) But Democrats have overstepped when they claimed we’ve added " millions of jobs in manufacturing."
Still, Romney’s pushed for a harder stance on Chinese trade, while portraying Obama as weak. For this fact-check, we’re examining whether "seven times Obama could have stopped China’s cheating" and "seven times, he refused."
What happened ‘seven times’?
The Romney campaign posted a news release Sept. 17, 2012, explaining its reasoning. It says that under Obama, the U.S. Treasury Department has refused seven times to label China as a "currency manipulator."
A little background: Twice a year, the Treasury Department must report to Congress on "the currency practices of America's major trading partners." If it tells Congress that a country has engaged in manipulating its currency — say, keeping the value of its currency artificially low to boost its exports, as China’s been known to do — that triggers a process to start "expedited" negotiations with the country, perhaps drawing in the International Monetary Fund.
The legal designation also prompts Congress to take action to punish the offender.
Slapping China with the label has support from some think tanks, unions, businesses and members of Congress, who urged President George W. Bush and Obama to take the step. Candidate Obama, in fact, pushed for a tougher stance.
The number of times his administration declined to name China a currency manipulator "is a check on whether Obama administration trade policy has succeeded by the light of his own 2008 promises. It has not," said Philip Levy, a Romney supporter who teaches global economics at the Darden School of Business at University of Virginia.
(We rated an Obama promise to urge China to stop manipulation of its currency value a Compromise.)
But a "currency manipulator" label isn’t the only way to take China to task for its trade practices. Nor does it automatically stop China’s cheating, as Romney put it.
The last time Treasury cited China as a currency manipulator was in 1994. Negotiations afterward didn’t produce any major results.
Since then, U.S. presidents have argued for a more diplomatic approach. Bush’s Treasury Department, for example, didn’t call China a currency manipulator, but encouraged the country’s membership in the World Trade Organization. It joined in 2001.
As a WTO member, China must play by the rules or face trade cases filed by other member countries. The value of China’s currency, the renminbi, started to rise in 2005 as it worked to bring its policies into line with international trade rules. That rise has stalled in recent years as China grappled with international financial uncertainty.
And that’s renewed calls for the "currency manipulator" label.
"The administration continues to let China get away with flouting trade rules just for the sake of diplomacy," Sen. Charles Schumer, D-N.Y, said in a statement reported by The Hill in May 2012. "Calling out China as a manipulator may be awkward, but it is time to take off the kid glove."
Experts told us that while Romney’s campaign is right that Obama hasn’t labeled China a currency manipulator, that’s not the same thing as failing to pressure China over its trade practices.
"The criterion the Romney campaign is using to judge Obama's China trade policy is ridiculously narrow," said Paul Blustein, a trade expert with the Brookings Institution, a Washington think tank. "... I'm by no means a big fan of the Obama administration's trade policy toward China, but I think it's absurd to make it sound as if the administration has been somehow ignoring unfair trade practices by the Chinese."
Obama’s administration has filed trade cases with the WTO over issues such as auto parts and flat-rolled electrical steel, and plans more. It also pursued remedies through the U.S. International Trade Commission and created an Interagency Trade Enforcement Center.
The Bush Administration brought seven WTO cases over two terms. The Obama administration has already filed seven.
(That’s prompted Obama’s campaign staff to say the administration has brought trade cases "at nearly twice the rate" as Bush did, something we’ve found just Half True because of the timing of China’s WTO membership.)
Meanwhile, the Obama team has "urged China" to let its currency gain value vs. the dollar in periodic talks, said Gary Clyde Hufbauer, a senior fellow for the Peterson Institute for International Economics who writes about U.S.-China trade and worked in the Carter and Ford administrations.
"I would characterize Obama's economic policy towards China as 'case-by-case' litigation and diplomacy," he said. "By contrast, Romney urges a broader brush, more strategic confrontation."
A Romney campaign ad claims that "seven times Obama could have stopped China's cheating. Seven times, he refused." It’s true that the Obama administration passed up seven opportunities to label China a currency manipulator, something it’s been encouraged to do by some members of Congress, unions and businesses.
But that designation in 1994 and earlier didn’t stop the kind of "cheating" Romney’s talking about. Meanwhile, the ad makes it sound as though Obama "refused" to take on China over unfair trade practices. The administration hasn’t done as much as some on the right and left have demanded, but among other things it has filed seven trade cases with the WTO — with more coming — and engaged in diplomatic talks.
The claim is partially accurate, but leaves out important details. We rate it Half True.
Romney for President, "Failing American Workers," Sept. 13, 2012, via YouTube
MittRomney.com, "Too little, too late on China," Sept. 17, 2012
PolitiFact, "Barack Obama says U.S. has gained a half-million manufacturing jobs," Sept. 6, 2012 (True)
PolitiFact, "President Barack Obama says his administration has nearly doubled rate of China trade cases," April 18, 2012 (Half True)
PolitiFact, "Debbie Wasserman Schultz says Obama has created ‘millions’ of manufacturing jobs," Nov. 15, 2011 (Half True)
PolitiFact's Obameter, "Urge China to stop manipulation of its currency value," updated Nov. 11, 2011 (Compromise)
Background briefing on the Obama administration’s challenge to China’s export subsidies to auto and auto parts manufacturers in China, Sept. 17, 2012
Treasury Department, "Semiannual Report on International Economic and Exchange Rate Policies," accessed Sept. 17, 2012
Treasury Department, Omnibus Trade and Competitiveness Act of 1988, accessed Sept. 18, 2012
Treasury Department, "U.S.-China Strategic and Economic Dialogue," accessed Sept. 17, 2012
Office of the U.S. Trade Representative, "China," accessed Sept. 18, 2012
Office of the U.S. Trade Representative, "Obama Administration Challenges China’s Export Subsidies to Auto and Auto Parts Manufacturers in China," Sept. 17, 2012
World Trade Organization, Find disputes cases: All the disputes with China as respondent and with United States as complainant, accessed Sept. 18, 2012
U.S. International Trade Commission, "Investigations Under Section 421 of the Trade Act of 1974," accessed Sept. 18, 2012
Email interview with Paul Blustein, nonresident fellow for global economy and development, Brookings Institution, Sept. 17, 2012
Email interview with Gary Clyde Hufbauer, Reginald Jones senior fellow for the Peterson Institute for International Economics, Sept. 17, 2012
Email interview with Philip Levy, University of Virginia, Darden School of Business, Sept. 17, 2012
Wall Street Journal, "U.S. to File WTO Charges on China," Sept. 17, 2012
The Hill, "Treasury: China Not Manipulating Currency," May 25, 2012
Los Angeles Times, "U.S. Declines To Label China A Currency Manipulator,"
May 25, 2012
Reuters, "U.S. Again Says China Not Currency Manipulator," Dec. 28, 2011
Market Watch, "Treasury Says China Isn’t A Currency Manipulator," May 27, 2011
New York Times, "China’s Currency Avoids "Manipulated" Ruling Again," Feb. 4, 2011
Market Watch, "Treasury Does Not Cite China As Currency Manipulator," July 8, 2010
USA Today, "Administration Declines To Cite China On Currency Manipulation," Oct. 15, 2009
Reuters, "U.S. Again Declines To Brand China Currency Manipulator," April 15, 2009
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