Bipartisan Group Introduces Legislation to Hold Currency Manipulators Accountable
WASHINGTON – Ways and Means Committee Ranking Member Sander Levin (D-Mich.) today joined a bipartisan group of members from the House to introduce legislation to crack down on currency manipulation by China and other nations. The House legislation already has 101 Democratic and Republican co-sponsors.
The Currency Reform for Fair Trade Act of 2013 seeks to level the playing field for American workers and businesses by providing the administration the necessary tools to address the issue of undervaluation of currency by our trading partners. A nearly identical bill garnered 234 co-sponsors in the 112th Congress. (Background and details of legislation below.)
“Currency manipulation by our trading partners has been going on for far too long, with American workers feeling the impact through lost jobs and lower wages,” said Ways and Means Ranking Member Levin (D-MI), who joined Reps. Tim Murphy (R-PA), Tim Ryan (D-OH) and Mo Brooks (R-AL) at a press conference to announce the bill’s introduction. “This bill includes measures to provide the Administration with the additional tools necessary to enforce the rules of global trade and is consistent with our WTO obligations. It also helps strengthen the Administration’s efforts to develop a multilateral framework for addressing this global competitiveness issue.”
“American manufacturing is ripe for a resurgence,” said Congressman Tim Murphy (R-PA). “Our country boasts one of the most talented workforces in the world, but it’s time to put in place clear standards that give American manufacturers — and the working men and women of this country — a fair shot at competing and succeeding in a free global economy. Passage of the bipartisan Currency Reform for Fair Trade Act is step one. I call on my colleagues from both sides of the aisle to act promptly to give the Department of Commerce the necessary tools to build honest and fair trade relations that will spur an economic revival.”
“We need to hold countries like China accountable so that they don’t exploit an unfair advantage through currency manipulation and other trade subsidies,” said Congressman Tim Ryan (D-OH). The Currency Reform for Fair Trade Act will keep our manufacturing sector thriving and keep the United States competitive in the global marketplace. We owe it to the American people to take action on the currency imbalance we have with China. This legislation has bipartisan support, will address our trade imbalance and help create the jobs we need here at home.”
“Americans cannot stand idly by and watch other nations ignore the rules, undermining our economy via unfair trade practices,” said Congressman Mo Brooks (R-AL). “The American economy can do great things, but we cannot ask Americans to compete with an opponent who is playing with a stacked deck. That’s why I’m supporting the Currency Reform for Fair Trade Act, which will hold countries with unfair currency practices accountable, and promote economic growth for both the United States and her trading partners.”
Currency manipulation policies are a drag on U.S. economic growth and job creation, making exports from various countries cheaper than they would otherwise would be. The Peterson Institute for International Economics, in a December 2012 report, noted that “half or more of excess US unemployment — the extent to which current joblessness exceeds the full employment level—is attributable to currency manipulation by foreign governments.” As a general matter, under the U.S. countervailing duty law, remedial tariffs can be imposed on imports benefitting from foreign government subsidies for export, if it is shown that imports benefitting from such subsidies cause or threaten injury to a U.S. industry producing the same or similar products. To date, the Department of Commerce has declined to investigate any foreign government’s currency practices as a countervailable subsidy.
The Currency Reform for Fair Trade Act ends a long-standing Commerce practice that is far more restrictive than required under U.S. law and WTO disciplines. In the past, Commerce has resisted finding an export subsidy if the subsidy is not limited exclusively to circumstances of export (i.e., when non-exporters may benefit). The Currency Reform for Fair Trade Act precludes Commerce from imposing this bright-line rule and, instead, requires Commerce to consider all the facts in making its determination of export contingency. The Currency Reform for Fair Trade Act also provides important guidance to Commerce in assessing whether a “benefit” exists in circumstances involving material currency undervaluation resulting from government intervention. Specifically, Commerce is directed to assess “benefit” in terms of the additional currency the exporter receives as a result of the undervaluation and to use widely-accepted IMF methods for determining the level of undervaluation.
Full text of the bill is available here.