China currency bill introduced in House, Senate
May 15, 2009
World Trade\Interactive
Dozens of lawmakers are supporting legislation in the House and Senate aimed at countering currency manipulation by foreign countries. The new bills were introduced this week following a recent Treasury Department report that again declined to name China a currency manipulator. Although China is the primary target of these measures, they could be used against other countries as well.
According to press releases from some of the bills’ sponsors, the Currency Reform for Fair Trade Act provides an explicit definition of when currency misalignment occurs and directs the Department of Commerce to measure whether a country’s currency is fundamentally misaligned. If the DOC certifies that the country is undervaluing its currency, imports from that country would be subject to antidumping or countervailing duties, provided that the International Trade Commission determines that the misalignment has caused or threatens to cause material injury to U.S. companies and workers. The legislation also directs the DOC to treat currency undervaluation as a prohibited export-contingent subsidy.
It remains to be seen whether these bills will advance in either the House or Senate. Key leaders have expressed some hesitancy to pursue this issue given that it is not a high priority for the Obama administration as well as concerns that it could prompt retaliatory measures against U.S. exports.
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