Congress Cracks Down on China's Currency Manipulation
One Goal: To Be the Best in Business

Congress Cracks Down on China's Currency ManipulationA bipartisan group of senators has introduced legislation that it says will crack down on China’s artificial under-valuation of its currency and attempt to level the playing field for U.S. importers and exporters.

Announced Sept. 22, The Currency Reform for Free Trade Act of 2011 will give the government the ability to reform the currency exchange rates and provides consequences for countries that fail to address the misalignment. The bill combines legislation sponsored earlier this year by Sen. Sherrod Brown (D-OH) and Olympia Snowe (R-ME), and a proposal by Sen. Charles Schumer (D-NY) and Lindsey Graham (R-SC) that passed the Senate Finance Committee back in 2007. It is similar to House Legislation on Currency Reform for Fair Trade Acts sponsored by Rep. Sander Levin (D-MI), and backed by more than 200 bipartisan congressmen.

Sponsors of The Currency Reform for Free Trade Act contend that the currency manipulation “closes opportunities for American business to sell their goods in china, while flooding other export markets with cheap goods.” According to a new Economic Policy Institute study, of the 6 million manufacturing jobs lost in the U.S. in the past decade, 1.9 million were lost as a direct result of increased trade with China and that government’s manipulation of the currency rate. In addition, the U.S. trade deficit to China has risen from $83 billion in 2001 to $273 billion in 2010.

Only by addressing the currency manipulation can the U.S. hope to reduce our trade deficit and get back jobs. Key points of the The Currency Exchange Rate Oversight Reform Act of 2011 include:

• Improves the oversight of the currency exchange rate by the Treasury.

• Clarifies the countervailing duty law to address currency under-evaluation.

• States that Commerce may not refuse to investigate a subsidy allegation. This clarification is supported by the WTO’s Appellate Body and is a key element in the previous Brown-Snowe currency bill and in HR 2378, which passed in September 2010.

• Triggers a series of consequences, including:

Immediate: “consider designation of a country’s currency as a ‘priority’ currency when determining whether to grant the country ‘market economy’ status for purpose of U.S. antidumping law.”

After 90 days: “forbid federal procurement of goods and services from the designated country unless that country is a member of the WTO Government Procurement Agreement,” and “forbid Overseas Private Investment Corporation financing or insurance for projects in the designated country.”

After 360 days and failure to adopt appropriate policies: “The administration must require the U.S. Trade Representative to request dispute settlement consultations in the World Trade Organization with the government responsible for the currency,” and “require the Department of Treasury to consult with the Federal Reserve Board and other central banks to consider remedial intervention in currency markets.”

In a statement, Sen. Carl Levin (D-MI) said, “American companies are not just competing against foreign companies, they’re competing against foreign countries. This is especially true when foreign governments like China and Japan manipulate the value of their currency to keep its value artificially low. Currency manipulation makes Chinese and Japanese exports unfairly cheap and U.S. products more expensive in China and Japan, displacing U.S. production and jobs. This is nothing short of a government subsidy and we should be doing all we can to fight back against such harmful unfair trade practices.”

“This bill targets the unfair trade practice of currency manipulation by China and ensures that American manufacturers can compete in the 21st century global economy,” said Sen. Kay Hagan (D-NC). “China has been playing games with its currency and we all know it. It is time to get tough. The American workers I know are the best in the world — what they need is a fair playing field.”

More than a dozen coalitions have also given their support to this bill. Will you?


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