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Ongoing disputes over Chinese practices

The salesmen for three Far Eastern manufacturing companies must have been surprised when they got to the BAUMA international construction equipment show in Munich, Germany, April 19.

Instead of showing off their firms’ new backhoes and loaders, they found their machines had either been removed from the show and impounded or concealed from view as a result of complaint filed by JCB, a company whose U.S. offices are in Savannah, Ga.

Officials with JCB, which builds construction, agricultural and industrial equipment, took the action because of product copying and patent infringements by the three exhibitors. (A spokesperson said JCB had been advised not to identify the country where the companies are based.)

JCB is fortunate it sells equipment with features that were easily identifiable when someone copies its patents. Imagine what U.S. textile firms could have done 10 years ago if they had been able to take similar action against Chinese manufacturers who ripped off their designs and turned out copies by the thousands.

They couldn’t, and U.S. textile mill use of cotton has dropped to a fourth of what it was 10 years ago as Chinese yarn mills and apparel manufacturers ramped up production of garments formerly made in the USA.

If the U.S. mills simply couldn’t compete, that would have been one thing. But they never were in a fair fight according to supporters of new legislation aimed at addressing China’s prolonged devaluation of its currency.

The Fair Currency Coalition, whose executive director testified at a Senate hearing on the legislation on April 22, has worked for years to persuade the U.S. government to take action against the Chinese currency misalignment. After the Bush administration rejected its request, the group began seeking legislative remedies.

Fair Currency Coalition is now backing the Currency Reform for Fair Trade Act, introduced by Senators Debbie Stabenow and Jim Bunning in the Senate (S. 1027) and by Reps. Tim Ryan and Tim Murphy in the House (H.R. 2378).

“Many would prefer to find a solution in the multilateral rules that are supposed to provide a framework for settling monetary disputes among nations,” says the Fair Currency Coalition’s Charles Blum. “By now it should be clear existing multilateral rules and institutions are woefully inadequate to deal with the problem of currency misalignment.”

The International Monetary Fund, for example, has tried to enforce its rules against members manipulating exchange rates to gain an unfair competitive advantage over other members, but to no avail. China simply ignored the IMF’s “diplomatic” suggestions that it revalue the renminbi.

While this may be “old news” to some, it’s a life-and-death issue for companies that still have some ability to compete against the Chinese. For more on this issue, go to


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