Today, U.S. Representative Mike Doyle (D-PA-14) joined a majority of Members of Congress in voting to pass the Currency Reform for Fair Trade Act, legislation to punish foreign countries for artificially under-valuing their currency to subsidize their imports to the United States.  

“US workers and companies can compete with any country on a level playing field, but we’ve seen in recent decades the devastation that imports subsidized by foreign governments can do to our domestic manufacturing sector,” Congressman Doyle observed.  “It’s long past time for us to protect American jobs and businesses by cracking down on currency manipulation.”

Artificially low currencies – currencies that don’t move up or down in response to changes in international trade balances – create more export jobs in the home country and make US imports more expensive (and less competitive).  That causes manufacturing job losses in the United States and drives up our trade deficit, which will seriously hurt our economy in the long run.

China’s undervaluation of its currency in recent years has had a devastating impact on U.S.-China trade, as well as in third-country markets where U.S. exports compete head-to-head with Chinese exports for sales.  What’s more, U.S. investments made in China in dollars receive an artificial bonus, promoting the outsourcing of American production and jobs.  

Put another way, products made in America have been undercut by Chinese goods, which are substantially subsidized by the Chinese government’s policy of manipulating the value of its currency.

The Chinese government’s intervention in world markets has caused its currency to be undervalued by as much as 25 to 40 percent.  If China allowed its currency to respond to market forces, it could create a million U.S. manufacturing jobs and cut our trade deficit with China by $100 billion a year, with no cost to the U.S. treasury.  

The Currency Reform for Fair Trade Act would give the Administration effective tools to address the unfair trade practice of currency manipulation by foreign countries, including China.  The bill makes clear that additional tariffs can be imposed to offset the effects of a “fundamentally undervalued” currency under U.S. trade remedy laws (known as the countervailing duty laws).  It reverses a current Commerce Department practice that has precluded it from treating foreign government currency practices as an export subsidy;

The Currency Reform for Fair Trade Act was approved by the House with strong bipartisan support and now must be taken up by the Senate.