H.R.1276: Currency Reform for Fair Trade Act of 2013
Ways and Means Committee Ranking Member Sander Levin (D-Mich.) 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
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.\
Press Release: Bipartisan Group Introduces Legislation to Hold Currency Manipulators Accountable
Full text of the bill is available here.