[Congressional Bills 108th Congress]
[From the U.S. Government Publishing Office]
[H. Con. Res. 285 Introduced in House (IH)]
108th CONGRESS
1st Session
H. CON. RES. 285
Expressing the concern of the Congress regarding the detrimental impact
on the United States economy of the manipulation by foreign governments
of their currencies.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
September 17, 2003
Mr. Manzullo (for himself, Mr. Stenholm, Mr. Rogers of Michigan, Mr.
Hill, Mr. Green of Wisconsin, and Mr. Hinojosa) submitted the following
concurrent resolution; which was referred to the Committee on Ways and
Means
_______________________________________________________________________
CONCURRENT RESOLUTION
Expressing the concern of the Congress regarding the detrimental impact
on the United States economy of the manipulation by foreign governments
of their currencies.
Whereas manufacturing is critical to the health of the United States economy,
generating high quality products, personal opportunity, careers, wealth,
high standards of living, and economic growth that together enable the
American Dream;
Whereas the manufacturing sector faces the most intense global competition in
United States history, making it impossible for many firms to operate
profitably and earn a return on capital invested, even as manufacturing
costs continue to increase for many reasons, including governmental
actions;
Whereas in July 2000 the manufacturing sector slipped into recession and since
has lost 2,700,000 high paying manufacturing jobs, while the rest of the
economy has actually added 623,000 jobs;
Whereas industrial trade experts estimate that at least half of these
manufacturing job losses have been due to adverse trade movements,
principally due to the effects of an overvalued United States dollar;
Whereas exports of United States manufactured goods have fallen by
$100,000,000,000 from their peak in 2000, and account for up to 40
percent of the total decline in production and jobs;
Whereas manufacturing remains the most trade sensitive sector of the United
States economy, with one sixth of all United States manufacturing jobs,
and almost one quarter in durable goods production, attributable to
exported products;
Whereas the primary objective of the international monetary system should be to
facilitate international trade and investment by helping to ensure that
exchange rates realistically reflect the relative level of prices and
costs in different countries, and that they be flexible enough to
respond to changes, over time, in such relationships;
Whereas currency manipulation by the People's Republic of China, Japan, South
Korea, and Taiwan, the major Asian trading partners of the United
States, has contributed significantly to the loss of United States
manufacturing jobs since July 2000;
Whereas these 4 countries hold, in the aggregate, $1,210,000,000,000 of currency
reserves, half of which have been bought since 1999;
Whereas currency manipulation effectively subsidizes all exports to the United
States, and places additional de facto tariffs on all imports of goods
and services from the United States;
Whereas in its 2003 annual report, the globally respected Bank of International
Settlements criticized those currency practices of Asian countries that
seek to maintain large trade surpluses;
Whereas the International Monetary Fund has also criticized the buildup of Asian
currency reserves as destabilizing and advocated a floating exchange
rate for the People's Republic of China;
Whereas for decades the International Monetary Fund and the General Agreement on
Tariffs and Trade have proscribed trade-distorting currency
manipulation;
Whereas Article IV, Section 1(iii) of the Articles of Agreement of the
International Monetary Fund cautions members to ``avoid manipulating
exchange rates . . . in order . . . to gain an unfair competitive
advantage over other members'', and a related provision defines
manipulation to include ``protracted large-scale intervention in one
direction in the exchange market'';
Whereas Article XV of the General Agreement on Tariffs and Trade 1994 (as
defined in section 2 of the Uruguay Round Agreements Act), which is
binding on members of the World Trade Organization, states that members
``shall not by exchange rate action frustrate the intent of the
provisions of this Agreement'', and the objective of that Agreement, as
stated in broad terms in its preamble, is ``entering into reciprocal and
mutually advantageous arrangements directed to the substantial reduction
of tariffs and other barriers to trade and to the elimination of
discriminatory treatment in international commerce'';
Whereas China has been manipulating the value of its currency by pegging its
exchange rate to the United States dollar;
Whereas China has refused to make any changes to its currency peg;
Whereas United States manufacturers doing business in China continue to face
other market barriers and unfair trade practices, including high
tariffs, subsidies, technical trade restrictions, counterfeiting, tied
trade, violations of intellectual property rights, and nonmarket-based
industrial policies that limit United States exports and increase import
competition;
Whereas the International Monetary Fund has advised China to adopt a more
flexible exchange rate policy, and has judged that such a change would
not have serious adverse consequences for that country;
Whereas China's current dollar accumulations now exceed $350,000,000,000 and are
growing at the rate of $120,000,000,000 each year--an amount that
approximates China's trade surplus with the Unites States;
Whereas China is engaged in massive currency intervention, through huge
purchases of United States dollars, to keep the yuan from appreciating,
despite large trade surpluses and investment inflows;
Whereas this intervention has maintained the Chinese yuan at its artificially
low 1994 value--which by some estimates is 40 percent below its market
value; and
Whereas the magnitude of the distorting effects are clear: unless addressed
immediately, China's currency manipulation and unfair trading practices
could further weaken the manufacturing sector in the United States and
spawn (1) massive United States trade deficits, and (2) calls for
protectionism, which would undermine the global economy: Now, therefore,
be it
Resolved by the House of Representatives (the Senate concurring),
That--
(1) the Congress declares that manufacturing is an industry
critical to the future well-being and national security of the
United States and, therefore, the United States Government
should make greater efforts to promote innovation, reduce
manufacturing costs, and level the international playing field
for this sector;
(2) the Congress believes that the clear intention of the
manipulation by Asian countries of their currencies is to
increase exports and restrict imports, that is, to introduce an
artificial element that assures that there will not be a level
playing field for international trade;
(3) the Congress further believes that the manipulation by
the People's Republic of China of its currency violates Article
XV (4) of the General Agreement on Tariffs and Trade 1994 (as
defined in section 2 of the Uruguay Round Agreements Act), and
is unjustifiable and unreasonable, and burdens and restricts
United States commerce, under section 301 of the Trade Act of
1974;
(4) in order to help achieve greater equity in competitive
conditions and international trade practices, the Congress
calls on the President--
(A) to vigorously enforce United States laws that
provide remedies to counteract the unfair foreign
practice of currency manipulation; and
(B) to encourage the harmonization of an
international exchange rate policy of freely floating
exchange rates based on market forces, where government
currency intervention is kept to a minimum;
(5) the executive branch should take steps that enable the
dollar and other major currencies to move toward their
equilibrium rates by correcting market imperfections,
countering foreign currency manipulation, and seeking
cooperation among major countries in taking appropriate
coordinated actions;
(6) the Congress commends the recent actions and statements
by the President and the Secretary of the Treasury that have
delivered a strong message from the United States Government
that the United States expects its trading partners to treat
the people, producers, workers, farmers, and manufacturers of
the United States fairly;
(7) the Congress believes that--
(A) the currency of a country should be controlled
by the market and should reflect the true values of the
economy of that country; and
(B) the management of currencies at unnatural rates
distorts markets and encourages protectionism;
(8) the Congress has directed the General Accounting Office
to undertake an ongoing review of currency manipulation
practices worldwide and their impact on the agriculture and
manufacturing sectors in the United States;
(9) the Secretary of the Treasury should ensure that each
semiannual report due to the Congress on international economic
and exchange rate policies addresses the full range of currency
manipulation practices of foreign governments;
(10) the Congress strongly urges the United States Trade
Representative to take action under section 301 of the Trade
Act of 1974 to combat unfair currency manipulation practices in
order to protect United States commerce and to gain access to
foreign markets for United States goods and services, should
negotiations fail to produce meaningful results; and
(11) the Congress encourages the President to review all
other tools to level the playing field with respect to currency
manipulation.
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