[Congressional Bills 109th Congress]
[From the U.S. Government Publishing Office]
[S. 295 Introduced in Senate (IS)]







109th CONGRESS
  1st Session
                                 S. 295

 To authorize appropriate action if the negotiations with the People's 
   Republic of China regarding China's undervalued currency are not 
                              successful.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                            February 3, 2005

  Mr. Schumer (for himself, Mr. Graham, Mr. Bunning, Mr. Durbin, Mr. 
  Reid, Mr. Kohl, Mrs. Dole, Ms. Stabenow, Mr. Dodd, Mr. Levin, Mrs. 
Clinton, Mr. Bayh, and Mr. DeWine) introduced the following bill; which 
        was read twice and referred to the Committee on Finance

_______________________________________________________________________

                                 A BILL


 
 To authorize appropriate action if the negotiations with the People's 
   Republic of China regarding China's undervalued currency are not 
                              successful.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. NEGOTIATIONS REGARDING CURRENCY VALUATION.

    (a) Findings.--Congress makes the following findings:
            (1) The currency of the People's Republic of China, known 
        as the yuan or renminbi, is artificially pegged at a level 
        significantly below its market value. Economists estimate the 
        yuan to be undervalued by between 15 percent and 40 percent or 
        an average of 27.5 percent.
            (2) The undervaluation of the yuan provides the People's 
        Republic of China with a significant trade advantage by making 
        exports less expensive for foreign consumers and by making 
        foreign products more expensive for Chinese consumers. The 
        effective result is a significant subsidization of China's 
        exports and a virtual tariff on foreign imports.
            (3) The Government of the People's Republic of China has 
        intervened in the foreign exchange markets to hold the value of 
        the yuan within an artificial trading range. China's foreign 
        reserves are estimated to be over $609,900,000,000 as of 
        January 12, 2005, and have increased by over $206,700,000,000 
        in the last 12 months.
            (4) China's undervalued currency, China's trade advantage 
        from that undervaluation, and the Chinese Government's 
        intervention in the value of its currency violates the spirit 
        and letter of the world trading system of which the People's 
        Republic of China is now a member.
            (5) The Government of the People's Republic of China has 
        failed to promptly address concerns or to provide a definitive 
        timetable for resolution of these concerns raised by the United 
        States and the international community regarding the value of 
        its currency.
            (6) Article XXI of the GATT 1994 (as defined in section 
        2(1)(B) of the Uruguay Round Agreements Act (19 U.S.C. 
        3501(1)(B))) allows a member of the World Trade Organization to 
        take any action which it considers necessary for the protection 
        of its essential security interests. Protecting the United 
        States manufacturing sector is essential to the interests of 
        the United States.
    (b) Negotiations and Certification Regarding the Currency Valuation 
Policy of the People's Republic of China.--
            (1) In general.--Notwithstanding the provisions of title I 
        of Public Law 106-286 (19 U.S.C. 2431 note), on and after the 
        date that is 180 days after the date of enactment of this Act, 
        unless a certification described in paragraph (2) has been made 
        to Congress, in addition to any other duty, there shall be 
        imposed a rate of duty of 27.5 percent ad valorem on any 
        article that is the growth, product, or manufacture of the 
        People's Republic of China, imported directly or indirectly 
        into the United States.
            (2) Certification.--The certification described in this 
        paragraph means a certification by the President to Congress 
        that the People's Republic of China is no longer acquiring 
        foreign exchange reserves to prevent the appreciation of the 
        rate of exchange between its currency and the United States 
        dollar for purposes of gaining an unfair competitive advantage 
        in international trade. The certification shall also include a 
        determination that the currency of the People's Republic of 
        China has undergone a substantial upward revaluation placing it 
        at or near its fair market value.
            (3) Alternative certification.--If the President certifies 
        to Congress 180 days after the date of enactment of this Act 
        that the People's Republic of China has made a good faith 
        effort to revalue its currency upward placing it at or near its 
        fair market value, the President may delay the imposition of 
        the tariffs described in paragraph (1) for an additional 180 
        days. If at the end of the 180-day period the President 
        determines that China has developed and started actual 
        implementation of a plan to revalue its currency, the President 
        may delay imposition of the tariffs for an additional 12 
        months, so that the People's Republic of China shall have time 
        to implement the plan.
            (4) Negotiations.--Beginning on the date of enactment of 
        this Act, the Secretary of the Treasury, in consultation with 
        the United States Trade Representative, shall begin 
        negotiations with the People's Republic of China to ensure that 
        the People's Republic of China adopts a process that leads to a 
        substantial upward currency revaluation within 180 days after 
        the date of enactment of this Act. Because various Asian 
        governments have also been acquiring substantial foreign 
        exchange reserves in an effort to prevent appreciation of their 
        currencies for purposes of gaining an unfair competitive 
        advantage in international trade, and because the People's 
        Republic of China has concerns about the value of those 
        currencies, the Secretary shall also seek to convene a 
        multilateral summit to discuss exchange rates with 
        representatives of various Asian governments and other 
        interested parties, including representatives of other G-7 
        nations.
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