Yuan Right For Manufacturers
LANSING — The leading advocate for the state's manufacturing companies supports the Central America Free Trade Agreement (CAFTA) and hopes the Chinese government will follow through on its recent promise to let its currency float.
The Michigan Manufacturers Association (MMA), representing nearly 3,000 members, was pleased to learn that the Chinese yuan wouldn't be directly anchored to the U.S. dollar.
"We believe that it will make many of our products here in Michigan more competitive over there and, quite frankly, their products a little more expensive over here," said Charles Hadden, MMA vice president of government affairs.
Hadden told the Business Journal that China has to be an active but fair partner in trade, and the first step for the emerging economic giant to reach that point is to let the yuan float.
Of course, the proof is in the pudding and Hadden said the MMA would keep a close eye on how China handles the yuan. Allowing their currency to float could eventually open more markets there for the wide variety of product makers the MMA promotes.
Hadden said the MMA isn't calling for any further government action to be taken against
"At that point, it suddenly becomes out of the hands of the President, who is doing the negotiations. You know if a tax ended up on my desk, I'd have a hard time vetoing it. I think that kind of box helps the President at times," said Hadden.
The free trade agreement links the
American exports are heavily taxed when these goods enter those counties, and CAFTA would reportedly end tariffs immediately on 80 percent of
"We are fully supportive of it," said Hadden of the association's position. "We support it for many different reasons. But the main reason is we need to be able to help those countries support themselves and they can't do that under the current trade rules. We need to make sure that they have the ability to make their products down there and ship them here, and we, in turn, have the ability to make our products here and ship them there at very little cost for both sides."
Hadden said if that scenario does become reality, then some of the poorest nations in the northern hemisphere would be better able to conquer poverty.
"If that happens, then they can start pulling themselves out of poverty and develop a middle class, which is where we really want to get to with many of those countries," he said.
A study conducted by the World Bank reported CAFTA could reduce the number of poor people in
Also, some analysts have said that CAFTA would direct some American firms to shift a number of jobs from
"You need to be by your customers. You can't afford the shipping costs to keep prices low. So you're always going to have to have a
"The same is true for South and Central America, whether that ends up being in