110 HR 782 IH: Fair Currency Act of
U.S. House of Representatives
2007-01-31
text/xml
EN
Pursuant to Title 17 Section 105 of the United States Code, this file is not subject to copyright protection and is in the public domain.
1.This Act may be cited as the
Fair Currency Act of
2007
.
<enum>I</enum><header>Subsidies and
Product-Specific Safeguard Mechanism</header>
<section id="H59D5870D0AA340FE81DE5CE9295C8799"><enum>101.</enum><header>Findings</header><text display-inline="no-display-inline">Congress makes the following
findings:</text>
<paragraph id="H3999AE06C9E543B39826B5502100B9E1"><enum>(1)</enum><text>The economy and
national security of the United States are critically dependent upon a vibrant
manufacturing and agricultural base.</text>
</paragraph><paragraph id="HBD94389DF9CA4D17AFBAEEBEF3021C54"><enum>(2)</enum><text>The good health of
United States manufacturing and agriculture requires, among other things,
unfettered access to open markets abroad and fairly traded raw materials and
products in accord with the international legal principles and agreements of
the World Trade Organization and the International Monetary Fund.</text>
</paragraph><paragraph id="H776D28BA16204689B4ACE417848600C8"><enum>(3)</enum><text>The International
Monetary Fund, the G–8, and other international organizations have repeatedly
noted that exchange-rate misalignment can cause imbalances in the international
trading system that could ultimately undercut the stability of the system, but
have taken no action to redress such misalignments and imbalances.</text>
</paragraph><paragraph id="HD6ACA77F7B6B43E49089E327C933D0AB"><enum>(4)</enum><text>Since 1994, the
People’s Republic of China and other countries have repeatedly intervened in
currency markets and taken measures that have significantly misaligned the
values of their currencies against the United States dollar and other
currencies.</text>
</paragraph><paragraph id="H43B3CB1192F742E3BDF79C29C6EEEE00"><enum>(5)</enum><text>This policy by the
People’s Republic of China, for example, has resulted in substantial
undervaluation of the renminbi, by up to 40 percent or more.</text>
</paragraph><paragraph id="H38BD726B0E1E4269883800ECBD7673D0"><enum>(6)</enum><text>Evidence of this
undervaluation can be found in the large and growing annual trade surpluses of
the People’s Republic of China; substantially expanding foreign direct
investment in China; and the rapidly increasing aggregate amount of foreign
currency reserves that are held by the People’s Republic of China.</text>
</paragraph><paragraph id="H5EB438E6D59F4E69B79C345621FAFE8E"><enum>(7)</enum><text>Undervaluation by
the People’s Republic of China and by other countries acts as both a subsidy
for their exports and as a nontariff barrier against imports into their
territories, to the serious detriment of United States manufacturing and
agriculture.</text>
</paragraph><paragraph id="H04D221D22A8B429E833C0946AC2E42A5"><enum>(8)</enum><subparagraph commented="no" display-inline="yes-display-inline" id="H70B756EEAF264DF3B31BA72401FB0662"><enum>(A)</enum><text>As members of both the
World Trade Organization and the International Monetary Fund, the People’s
Republic of China and other countries have assumed a series of international
legal obligations to eliminate all subsidies for exports and to facilitate
international trade by fostering a monetary system that does not tend to
produce erratic disruptions, that does not prevent effective
balance-of-payments adjustment, and that does not gain unfair competitive
advantage.</text>
</subparagraph><subparagraph id="H9A1D6BA4E4864CC89388A6BC667CA022" indent="up1"><enum>(B)</enum><text>These obligations are most prominently
set forth in—</text>
<clause id="HA6785B3107C04917916277E328098B8B"><enum>(i)</enum><text>Articles VI, XV, and XVI of the
GATT 1994 (as defined in section 2(1)(B) of the Uruguay Round Agreements Act
(<external-xref legal-doc="usc" parsable-cite="usc/19/3501">19 U.S.C. 3501(1)(B)</external-xref>);</text>
</clause><clause id="H331DE1F80E8C44DA9CDBDAE6D5DC011C"><enum>(ii)</enum><text>the Agreement on Subsidies and
Countervailing Measures (as described in section 101(d)(12) of the Uruguay
Round Agreements Act (<external-xref legal-doc="usc" parsable-cite="usc/19/3511">19 U.S.C. 3511(d)(12)</external-xref>); and</text>
</clause><clause id="H96CF3CEFF47A4FF8A106B5F35D45174D"><enum>(iii)</enum><text>Articles IV and VIII of the
International Monetary Fund’s Articles of Agreement.</text>
</clause></subparagraph></paragraph><paragraph id="HD82BF8A4421A4EEAA7A7E228BFFC8ECD"><enum>(9)</enum><text>Under the
foregoing circumstances, it is consistent with the international legal
obligations of the People’s Republic of China and similarly situated countries
and with the corresponding international legal rights of the United States to
amend relevant United States trade laws to make explicit that exchange-rate
misalignment by any country is actionable as a countervailable export
subsidy.</text>
</paragraph></section><section id="H26651A8EF73946C5B3DBC06C806FC7F3"><enum>102.</enum><header>Application of
countervailing duties to nonmarket economy countries</header>
<subsection id="H4AA60A082A8E4129A7221C22F1C0E75C"><enum>(a)</enum><header>In
general</header><text>Section 701(a)(1) of the Tariff Act of 1930 (19 U.S.C.
1671(a)(1)) is amended by inserting <quote>(including a nonmarket economy
country)</quote> after <quote>country</quote> each place it appears.</text>
</subsection><subsection id="H63587EC3EB504A43AAA610D4FAE3BC15"><enum>(b)</enum><header>Use of Alternate
Methodologies</header><text>Section 771(5)(E) of the Tariff Act of 1930 (19
U.S.C. 1677(5)(E)) is amended by adding at the end the following: <quote>With
respect to a nonmarket economy country, for purposes of identifying and
measuring a subsidy benefit described in clause (i), (ii), (iii), or (iv), or
otherwise conferred upon a recipient, the administering authority shall use
methodologies that take into account the possibility that prevailing terms and
conditions in that country might not be available or might themselves be
inappropriate benchmarks due to market distortions. In such circumstances,
unless it is demonstrated that the nonmarket economy country’s prevailing terms
and conditions practicably can be adjusted to serve as appropriate benchmarks,
the administering authority shall use as benchmarks appropriate terms and
conditions prevailing outside the nonmarket economy country. When the party in
possession of the information necessary to identify and measure the benefit of
a subsidy does not timely and completely submit that information for the
record, the administering authority shall use for that purpose the facts
otherwise available and shall, as warranted, draw adverse
inferences.</quote>.</text>
</subsection><subsection id="HE7592811041345C784E8E76F3CBC0000"><enum>(c)</enum><header>Adjustments For
Export Price and Constructed Export Price</header><text>Section 772(c)(1)(C) of
the Tariff Act of 1930 (<external-xref legal-doc="usc" parsable-cite="usc/19/1677a">19 U.S.C. 1677a(c)(1)(C)</external-xref>) is amended by inserting
before the end comma the following: <quote>, whether the subject merchandise is
from a country with a market economy, a nonmarket economy, or a combination
thereof</quote>.</text>
</subsection><subsection id="HD2FD5B3F83EC43F88EF6A7896C3F2453"><enum>(d)</enum><header>Effective
Date</header><text>The amendments made by subsections (a), (b), and (c) apply
with respect to a countervailing duty proceeding initiated under subtitle A of
title VII of the Tariff Act of 1930 before, on, or after the date of enactment
of this Act.</text>
</subsection><subsection id="HC0F4C9B990DC4A7C8B03FC873197003F"><enum>(e)</enum><header>Antidumping
Provisions Not Affected</header><text>The amendments made by subsections (a),
(b), and (c) shall not affect the status of a country as a nonmarket economy
country for the purposes of any matter relating to antidumping duties under the
Tariff Act of 1930.</text>
</subsection></section><section id="H8438A5FC4A264286B140239F3CCE30DB"><enum>103.</enum><header>Clarification
to include exchange-rate misalignment as a countervailable subsidy under title
VII of the Tariff Act of 1930</header>
<subsection id="H4015A1114FE7408FA4D3C224AF31A5BD"><enum>(a)</enum><header>Amendments to
Definition of Countervailable Subsidy</header>
<paragraph id="H5E282E82B8B94634BC2E76F77FAEB5D6"><enum>(1)</enum><header>Financial
contribution</header><text>Section 771(5)(D) of the Tariff Act of 1930 (19
U.S.C. 1677(5)(D)) is amended—</text>
<subparagraph id="H2F47767EFA9F4E9387785B5F473E6EE3"><enum>(A)</enum><text>by redesignating
clauses (i) through (iv) as subclauses (I) through (IV), respectively;</text>
</subparagraph><subparagraph id="H3E741BF5F47E45DE92ACAEDE83D8B4C"><enum>(B)</enum><text>by striking
<quote>The term</quote> and inserting <quote>(i) The term</quote>; and</text>
</subparagraph><subparagraph id="HFFFBF9D83DE94DD7A7C2E42FF68D0000"><enum>(C)</enum><text>by adding at the
end the following:</text>
<quoted-block id="H86BD41048DDA4A1598F4D9BAB58900C7" style="OLC">
<clause id="H34F5907C30D14111AE7E6DC25102DD94"><enum>(ii)</enum><text>Exchange-rate
misalignment (as defined in paragraph (5C)) constitutes a financial
contribution within the meaning of subclauses (I) and (III) of clause
(i).</text>
</clause><after-quoted-block>.</after-quoted-block></quoted-block>
</subparagraph></paragraph><paragraph id="HD5563A2906554F57AAFAFB2E07564F19"><enum>(2)</enum><header>Benefit
conferred</header><text>Section 771(5)(E) of the Tariff Act of 1930 (19 U.S.C.
1677(5)(E)) is amended—</text>
<subparagraph id="H201CA654C4D54F8C8544A8C0088F515"><enum>(A)</enum><text>in clause (iii), by
striking <quote>, and</quote> and inserting a comma;</text>
</subparagraph><subparagraph id="H4FD9A5318E6049B0BC06CA50FFB7776B"><enum>(B)</enum><text>in clause (iv), by
striking the period at the end and inserting <quote>, and</quote>; and</text>
</subparagraph><subparagraph id="H292E46D3E660471382C136C9F05D3BCD"><enum>(C)</enum><text>by inserting after
clause (iv) the following new clause:</text>
<quoted-block id="HF30B15B4759F424D8D3BFFE516E5B09E" style="OLC">
<clause id="H904DD51D64BB4170BBE299E94F9C35AD"><enum>(v)</enum><text>in
the case of exchange-rate misalignment (as defined in paragraph (5C)), if the
price of exported goods in United States dollars is less than what the price of
such goods would be without the exchange-rate
misalignment.</text>
</clause><after-quoted-block>.</after-quoted-block></quoted-block>
</subparagraph></paragraph><paragraph id="H8515D096F9804A0F839978F9D2001DA"><enum>(3)</enum><header>Specificity</header><text>Section
771(5A)(B) of the Tariff Act of 1930 (19 U.S.C. 1677(5A)(B)) is amended by
inserting before the period at the end the following: <quote>, such as
exchange-rate misalignment (as defined in paragraph (5C))</quote>.</text>
</paragraph></subsection><subsection id="H373F65A65DC142F9B78DB692FC93EEC6"><enum>(b)</enum><header>Definition of
Exchange-Rate Misalignment</header><text>Section 771 of the Tariff Act of 1930
(<external-xref legal-doc="usc" parsable-cite="usc/19/1677">19 U.S.C. 1677</external-xref>) is amended by inserting after paragraph (5B) the following new
paragraph:</text>
<quoted-block id="HF6AF87EF6EDA437E81F135FCA7490700" style="OLC">
<paragraph id="H015985CE60E3438EA70856DD06FC7F88"><enum>(5C)</enum><header>Exchange-rate
misalignment</header>
<subparagraph id="H8407DDD8E73542CCAE92DCEB30110000"><enum>(A)</enum><header>In
general</header><text>For purposes of paragraphs (5) and (5A), the term
<quote>exchange-rate misalignment</quote> means an undervaluation of a foreign
currency as a result of protracted large-scale intervention by or at the
direction of a governmental authority in the exchange market. Such
undervaluation shall be found when the observed exchange rate for a foreign
currency is below the exchange rate that could reasonably be expected for that
foreign currency absent the intervention.</text>
</subparagraph><subparagraph id="H0DF69B08C0A441428C00E49EE9E946A5"><enum>(B)</enum><header>Factors</header><text>In
determining whether exchange-rate misalignment is occurring and a benefit
thereby is conferred, the administering authority in each case—</text>
<clause id="HC462CDF247074EB99ECD0528ADA1292D"><enum>(i)</enum><text>shall consider the
exporting country’s—</text>
<subclause id="HC00B74DEBF7C41C986E62405B6595BAD"><enum>(I)</enum><text>bilateral
balance-of-trade surplus or deficit with the United States;</text>
</subclause><subclause id="H2A1953EE7BF4422CA696F72ECC7E3DC"><enum>(II)</enum><text>balance-of-trade
surplus or deficit with its other trading partners individually and in the
aggregate;</text>
</subclause><subclause id="H985D4D1F46794738B61CDEDC67A2DAA1"><enum>(III)</enum><text>foreign direct
investment in its territory;</text>
</subclause><subclause id="H262FA7F0FC7A410EAC5C7CF33B757763"><enum>(IV)</enum><text>currency-specific
and aggregate amounts of foreign currency reserves; and</text>
</subclause><subclause id="HB5E92DCC47CC4D9199583DA959449BC"><enum>(V)</enum><text>mechanisms employed
to maintain its currency at an undervalued exchange rate relative to another
currency and, particularly, the nature, duration, and monetary expenditures of
those mechanisms;</text>
</subclause></clause><clause id="H9794BB6B1D3B4A5C9D68535389AC5FF8"><enum>(ii)</enum><text>may consider such
other economic factors as are relevant; and</text>
</clause><clause id="H8AA0D522DFC24AF0897EBE48E8935F6"><enum>(iii)</enum><text>shall measure the
trade surpluses or deficits described in subclauses (I) and (II) of clause (i)
with reference to the trade data reported by the United States and the other
trading partners of the exporting country, unless such trade data are not
available or are demonstrably inaccurate, in which case the exporting country's
trade data may be relied upon if shown to be sufficiently accurate and
trustworthy.</text>
</clause></subparagraph><subparagraph id="H07F1666CA05140D3A6B8B4CC4EEA97E3"><enum>(C)</enum><header>Computation</header><text>In
quantifying exchange-rate misalignment, the administering authority shall
develop and apply an objective methodology that is consistent with widely
recognized macroeconomic theory and shall rely upon governmentally published
and other publicly available and reliable data.</text>
</subparagraph><subparagraph id="HDFE43AF7C89B48A484B3E27C260369A3"><enum>(D)</enum><header>Type of
economy</header><text>An authority found to be engaged in exchange-rate
misalignment may have either a market economy or a nonmarket economy or a
combination
thereof.</text>
</subparagraph></paragraph><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="H2829F52301734ACDA3F26573E34953F8"><enum>(c)</enum><header>Effective
Date</header><text>The amendments made by this section apply with respect to a
countervailing duty proceeding initiated under subtitle A of title VII of the
Tariff Act of 1930 before, on, or after the date of enactment of this
Act.</text>
</subsection></section><section id="HEB4713004F2D4B398BEA7916C63C5128"><enum>104.</enum><header>Clarification
to include exchange-rate misalignment by the People’s Republic of China as a
condition to be considered with respect to market disruption under chapter 2 of
title IV of the Trade Act of 1974</header>
<subsection id="HB93EF6F1DD53481DA6578E516F32923E"><enum>(a)</enum><header>Market
Disruption</header>
<paragraph id="H8691513EFC744B968432DBB4D120A779"><enum>(1)</enum><header>In
general</header><text>Section 421(c) of the Trade Act of 1974 (19 U.S.C.
2451(c)) is amended by adding at the end the following new paragraphs:</text>
<quoted-block id="HC601CA83F78A4CE2BCF09C02DB00CF96" style="OLC">
<paragraph id="H60D8E5A8C3E044379D644C828D7609FE"><enum>(3)</enum><text>For purposes of
this section, the term <quote>under such conditions</quote> includes
exchange-rate misalignment (as defined in paragraph (4)).</text>
</paragraph><paragraph id="H33CFFF5122804DDB82F1EF81EB2DB5FE"><enum>(4)</enum><subparagraph commented="no" display-inline="yes-display-inline" id="HF600C072719E4E5C8F995EF1E3DEE34F"><enum>(A)</enum><text>For purposes of this
section, the term <quote>exchange-rate misalignment</quote> means an
undervaluation of the renminbi as a result of protracted large-scale
intervention by or at the direction of the Government of the People's Republic
of China in the exchange market. Such undervaluation shall be found when the
observed exchange rate for the renminbi is below the exchange rate that could
reasonably be expected for the renminbi absent the intervention.</text>
</subparagraph><subparagraph id="HD7532B1B259A482D8DEBEB26FEFF513F" indent="up1"><enum>(B)</enum><text>In determining whether exchange-rate
misalignment is occurring, the Commission in each case—</text>
<clause id="HCF0394B89EDD4FE0BEC06BFB23BE619B"><enum>(i)</enum><text>shall consider the People’s
Republic of China’s—</text>
<subclause id="H9B92C884F39341E4A6B7A44D41F02802"><enum>(I)</enum><text>bilateral balance-of-trade surplus or
deficit with the United States;</text>
</subclause><subclause id="HA6C4DC901C934FBFA72BA267A947CFF"><enum>(II)</enum><text>balance-of-trade surplus or deficit with
its other trading partners individually and in the aggregate;</text>
</subclause><subclause id="HFADD523AFFF946D89370795C780867A9"><enum>(III)</enum><text>foreign-direct investment in its
territory;</text>
</subclause><subclause id="H0F9CF66274F64E0681A742899B5D39C6"><enum>(IV)</enum><text>currency-specific and aggregate amounts
of foreign currency reserves; and</text>
</subclause><subclause id="H0224C03883434C3E8673892F6419BBCC"><enum>(V)</enum><text>mechanisms employed to maintain its
currency at an undervalued exchange rate relative to another currency and,
particularly, the nature, duration, and monetary expenditures of those
mechanisms;</text>
</subclause></clause><clause id="H1984EE13ECA448959DFFE3873DAADEB1"><enum>(ii)</enum><text>may consider such other economic
factors as are relevant; and</text>
</clause><clause id="HDBD4B40DDB9E48A9933FC0083F036F4E"><enum>(iii)</enum><text>shall measure the trade surpluses
or deficits described in subclauses (I) and (II) of clause (i) with reference
to the trade data reported by the United States and the other trading partners
of the People’s Republic of China, unless such trade data are not available or
are demonstrably inaccurate, in which case the trade data of the People’s
Republic of China may be relied upon if shown to be sufficiently accurate and
trustworthy.</text>
</clause></subparagraph><subparagraph id="H02AE9B81D25248CF9EE59DA5B17424EC" indent="up1"><enum>(C)</enum><header>Computation</header><text>In
quantifying exchange-rate misalignment, the Commission shall develop and apply
an objective methodology that is consistent with widely recognized
macroeconomic theory and shall rely upon governmentally published and other
publicly available and reliable
data.</text>
</subparagraph></paragraph><after-quoted-block>.</after-quoted-block></quoted-block>
</paragraph></subsection><subsection id="H7E63756B494F4598B6BC8E91E527199"><enum>(b)</enum><header>Critical
Circumstances</header><text>Section 421(i)(1) of the Trade Act of 1974 (19
U.S.C. 2451(i)(1)) is amended by inserting after subparagraph (B) the
following:</text>
<quoted-block display-inline="no-display-inline" id="H355437407E8944DAB313115647B87768" style="OLC">
<quoted-block-continuation-text quoted-block-continuation-text-level="subsection">If the
petition alleges and reasonably documents that exchange-rate misalignment is
occurring, such exchange-rate misalignment shall be considered as a factor
weighing in favor of affirmative findings in subparagraphs (A) and
(B).</quoted-block-continuation-text><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="H444173AA18D649B79C8EC838BCABAD2E"><enum>(c)</enum><header>Standard for
Presidential Action</header><text>Section 421(k)(2) of the Trade Act of 1974
(<external-xref legal-doc="usc" parsable-cite="usc/19/2451">19 U.S.C. 2451(k)(2)</external-xref>) is amended by adding at the end the following new
sentence: <quote>If the Commission makes an affirmative determination that
exchange-rate misalignment is occurring, the President shall consider such
exchange-rate misalignment as a factor weighing in favor of providing import
relief in accordance with subsection (a).</quote>.</text>
</subsection><subsection id="H4095FDF0DE224E4BACE0C3E5E8541200"><enum>(d)</enum><header>Modifications of
Relief</header><text>Section 421(n)(2) of the Trade Act of 1974 (19 U.S.C.
2451(n)(2)) is amended by adding at the end the following new sentence:
<quote>If the Commission affirmatively determines that exchange-rate
misalignment is occurring, the Commission and the President shall consider such
exchange-rate misalignment as a factor weighing in favor of finding that
continuation of relief is necessary to prevent or remedy the market disruption
at issue.</quote>.</text>
</subsection><subsection id="HE4E2D8DD33B742B1B13B9712F5A686B5"><enum>(e)</enum><header>Extension of
Action</header><text>Section 421(o) of the Trade Act of 1974 (19 U.S.C.
2451(o)) is amended—</text>
<paragraph id="H5D79678651DB45099C32857FB2642EEE"><enum>(1)</enum><text>in paragraph (1),
by adding at the end the following new sentence: <quote>If the Commission makes
an affirmative determination that exchange-rate misalignment is occurring, the
Commission shall consider such exchange-rate misalignment as a factor weighing
in favor of finding that an extension of the period of relief is necessary to
prevent or remedy the market disruption at issue.</quote>; and</text>
</paragraph><paragraph id="H29F2C24F4496445CB2C2B068E16C5C7F"><enum>(2)</enum><text>in paragraph (4),
by adding at the end the following new sentence: <quote>If the Commission makes
an affirmative determination that exchange-rate misalignment is occurring, the
President shall consider such exchange-rate misalignment as a factor weighing
in favor of finding that an extension of the period of relief is necessary to
prevent or remedy the market disruption at issue.</quote>.</text>
</paragraph></subsection><subsection id="H07D93C04920745D9988829631ED97C47"><enum>(f)</enum><header>Effective
Date</header><text>The amendments made by this section apply with respect to an
investigation initiated under chapter 2 of title IV of the Trade Act of 1974
before, on, or after the date of the enactment of this Act.</text>
</subsection></section><section id="HFF32986D4A5A47B38F6568A3B7088E71"><enum>105.</enum><header>Prohibition on
procurement by the department of defense of certain defense articles imported
from the People’s Republic of China</header>
<subsection id="HFDFC04BC728A4E00BCFC26C76C676F1"><enum>(a)</enum><header>Copy of Petition,
Request, or Resolution To Be Transmitted to the Secretary of
Defense</header><text>Section 421(b)(4) of the Trade Act of 1974 (19 U.S.C.
2451(b)(4)) is amended by inserting <quote>, the Secretary of Defense</quote>
after <quote>, the Trade Representative</quote>.</text>
</subsection><subsection id="HB26D98443937415880C250EC1D324D8"><enum>(b)</enum><header>Determination of
Secretary of Defense</header><text>Section 421(b) of the Trade Act of 1974 (19
U.S.C. 2451(b)) is amended by adding at the end the following new
paragraph:</text>
<quoted-block id="HC264537BCD0B4572982CFDEC2BAAD5" style="OLC">
<paragraph id="H6CEE90C95B70420BBB5FC9E0372182FD"><enum>(6)</enum><text>Not later than 15
days after the date on which an investigation is initiated under this
subsection, the Secretary of Defense shall submit to the Commission a report in
writing which contains the determination of the Secretary as to whether or not
the articles of the People’s Republic of China that are the subject of the
investigation are like or directly competitive with articles produced by a
domestic industry that are critical to the defense industrial base of the
United
States.</text>
</paragraph><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="H73BD34A08AB24F85A9F08F428ED75536"><enum>(c)</enum><header>Prohibition on
Procurement by the Department of Defense of Certain Defense Articles</header>
<paragraph id="H5DE2B45085B6442794FAF763755355DF"><enum>(1)</enum><header>Prohibition</header><text>If
the United States International Trade Commission makes an affirmative
determination under section 421(b) of the Trade Act of 1974 (19 U.S.C.
2451(b)), or a determination which the President or the United States Trade
Representative may consider as affirmative under section 421(e) of such Act (19
U.S.C. 2451(e)), with respect to articles of the People’s Republic of China
that the Secretary of Defense has determined are like or directly competitive
with articles produced by a domestic industry that are critical to the defense
industrial base of the United States, the Secretary of Defense may not procure,
directly or indirectly, such articles of the People’s Republic of China.</text>
</paragraph><paragraph id="H43FC9F91874B4DFEA6EA9CC50036B683"><enum>(2)</enum><header>Waiver</header><text>The
President may waive the application of the prohibition contained in paragraph
(1) on a case-by-case basis if the President determines and certifies to
Congress that it is in the national security interests of the United States to
do so.</text>
</paragraph></subsection></section><section id="H40D431ACB25C44298E5C879DADDAE44"><enum>106.</enum><header>Application to
goods from Canada and Mexico</header><text display-inline="no-display-inline">Pursuant to article 1902 of the North
American Free Trade Agreement and section 408 of the North American Free Trade
Agreement Implementation Act of 1993 (<external-xref legal-doc="usc" parsable-cite="usc/19/3438">19 U.S.C. 3438</external-xref>), the amendments made by
sections 102, 103, and 206 of this Act shall apply to goods from Canada and
Mexico.</text>
</section><enum>II</enum><header>International
Monetary and Financial Policy</header>
<section id="HBA3B4A914D604043959FD14F4F234E6B"><enum>201.</enum><header>Findings</header><text display-inline="no-display-inline">Congress makes the following
findings:</text>
<paragraph id="H9472F3784FD947DFA06FAFC06671AF99"><enum>(1)</enum><text>Since the Exchange
Rates and International Economic Policy Coordination Act of 1988 (22 U.S.C.
5302(3)) was enacted the global economy has changed dramatically, with
increased capital account openness, a sharp increase in the flow of funds
internationally, and an ever growing number of emerging market economies
becoming systemically important to the global flow of goods, services, and
capital. In addition, practices such as the maintenance of multiple currency
regimes have become rare.</text>
</paragraph><paragraph id="H73C8755C2A0543849447BE00C9BC30A2"><enum>(2)</enum><text>Exchange rates
among major trading nations are occasionally manipulated or fundamentally
misaligned due to direct or indirect governmental intervention in the exchange
market.</text>
</paragraph><paragraph id="H7EECC428B65941328B1FBABDB6F7F0D7"><enum>(3)</enum><text>A
major focus of national economic policy should be a market-driven exchange rate
for the United States dollar at a level consistent with a sustainable balance
in the United States current account.</text>
</paragraph><paragraph id="H03950E912A71474FACF11D9481FB7946"><enum>(4)</enum><text>While some degree
of surpluses and deficits in payments balances may be expected, particularly in
response to increasing economic globalization, large and growing imbalances
raise concerns of possible disruption to financial markets. In part, such
imbalances often reflect exchange rate policies that foster fundamental
misalignment of currencies.</text>
</paragraph><paragraph id="H9B3E2BE58F174092AA3CA0F600AEABE2"><enum>(5)</enum><text>Currencies in
fundamental misalignment can seriously impair the ability of international
markets to adjust appropriately to global capital and trade flows, distorting
trade flows and causing economic harm to the United States.</text>
</paragraph><paragraph id="H427B91FEE2984EA78D06AC2E7232B267"><enum>(6)</enum><text>The effects of a
fundamentally misaligned currency may be so harmful that it is essential to
correct the fundamental misalignment without regard to the purpose of any
policy that contributed to the misalignment.</text>
</paragraph><paragraph id="H59ADED8E5AFD4DC0803CDD8071540898"><enum>(7)</enum><text>In the interests
of facilitating the exchange of goods, services, and capital among countries,
sustaining sound economic growth, and fostering financial and economic
stability, Article IV of the International Monetary Fund's Articles of
Agreement obligates each member of the International Monetary Fund to avoid
manipulating exchange rates in order to prevent effective balance of payments
adjustments or to gain an unfair competitive advantage over other
members.</text>
</paragraph><paragraph id="HB3FA6518073E4892931BD0273E4B3E97"><enum>(8)</enum><text>The failure of a
government to acknowledge a fundamental misalignment of its currency or to take
timely and effective steps to correct such a fundamental misalignment, either
through inaction or mere token action, is a form of exchange rate manipulation
and is inconsistent with that government’s obligations under Article IV of the
International Monetary Fund’s Articles of Agreement.</text>
</paragraph></section><section id="H4B48AB2A8CFA4A9FB023DA3CCC6C8B43"><enum>202.</enum><header>Amendments to
definitions</header><text display-inline="no-display-inline">Section 3006 of
the Exchange Rates and International Economic Policy Coordination Act of 1988
(<external-xref legal-doc="usc" parsable-cite="usc/22/5306">22 U.S.C. 5306</external-xref>) is amended by adding at the end the following:</text>
<quoted-block id="HC141E9BB6B684FAA00AFEACFC8B4441C" style="OLC">
<paragraph id="HBB9B5CB541E34BE485BDEACF93079DB"><enum>(3)</enum><header>Fundamental
misalignment</header><text>The term <quote>fundamental misalignment</quote>
means a material sustained disparity between the observed levels of an
effective exchange rate for a currency and the corresponding levels of an
effective exchange rate for that currency that would be consistent with
fundamental macroeconomic conditions based on a generally accepted economic
rationale.</text>
</paragraph><paragraph id="H5315B5F8E44D42CA8864C00829FD89EC"><enum>(4)</enum><header>Effective
exchange rate</header><text>The term <quote>effective exchange rate</quote>
means a weighted average of bilateral exchange rates, expressed in either
nominal or real terms.</text>
</paragraph><paragraph id="HA74375A2EF92449CB96C13AEA83FD111"><enum>(5)</enum><header>Generally
accepted economic rationale</header><text>The term <quote>generally accepted
economic rationale</quote> means an explanation drawn on widely recognized
macroeconomic theory for which there is a significant degree of empirical
support.</text>
</paragraph><after-quoted-block>.</after-quoted-block></quoted-block>
</section><section id="H8284AE4FF1344EC79218D5D150533600"><enum>203.</enum><header>Bilateral
negotiations</header><text display-inline="no-display-inline">Section 3004(b)
of the Exchange Rates and International Economic Policy Coordination Act of
1988 (<external-xref legal-doc="usc" parsable-cite="usc/22/5304">22 U.S.C. 5304(b)</external-xref>) is amended to read as follows:</text>
<quoted-block id="H06A53FE39B9D4B698CB64EE73700B200" style="OLC">
<subsection id="H29EFB3146A1C453CBB5FE0C12D80AD91"><enum>(b)</enum><header>Bilateral
Negotiations</header>
<paragraph id="H96C0605D8685438DBCB6051F422DC3B5"><enum>(1)</enum><header>In
general</header><text>The Secretary of the Treasury shall analyze on an annual
basis the exchange rate policies of foreign countries, in consultation with the
International Monetary Fund, and consider whether countries—</text>
<subparagraph id="HA789CD0079204233AB125357948225C3"><enum>(A)</enum><text>manipulate the
rate of exchange between their currency and the United States dollar for
purposes of preventing effective balance of payments adjustments or gaining
unfair competitive advantage in international trade; or</text>
</subparagraph><subparagraph id="HA3CAE3FF2084404B8E222E25E976BCD"><enum>(B)</enum><text>have a currency
that is in fundamental misalignment.</text>
</subparagraph></paragraph><paragraph id="H82BAB66E69FB4B6AA8BD7D952FCD9258"><enum>(2)</enum><header>Affirmative
determination</header><text>If the Secretary considers that such manipulation
or fundamental misalignment is occurring with respect to countries that—</text>
<subparagraph id="HA5693264FF7F4DDEA090EAD14000FFA8"><enum>(A)</enum><text>have material
global current account surpluses; or</text>
</subparagraph><subparagraph id="H3DFA6EB074C848FAA1C8F98C9085B2E1"><enum>(B)</enum><text>have significant
bilateral trade surpluses with the United States,</text>
</subparagraph><continuation-text continuation-text-level="paragraph">the
Secretary of the Treasury shall take action to initiate negotiations with such
foreign countries on an expedited basis, in the International Monetary Fund or
bilaterally, for the purpose of ensuring that such countries regularly and
promptly adjust the rate of exchange between their currencies and the United
States dollar to permit effective balance of payments adjustments and to
eliminate the unfair advantage.</continuation-text></paragraph><paragraph id="HB6BB7FF1F4D64646BC0094A49C00B89C"><enum>(3)</enum><header>Exception</header><text>The
Secretary shall not be required to initiate negotiations if the Secretary
determines that such negotiations would have a serious detrimental impact on
vital national economic and security interests. The Secretary shall inform the
chairman and the ranking minority member of the Committee on Banking, Housing,
and Urban Affairs of the Senate and of the Committee on Financial Services of
the House of Representatives of the Secretary’s
determination.</text>
</paragraph></subsection><after-quoted-block>.</after-quoted-block></quoted-block>
</section><section id="H8C1793CA5AD04F87B43CBC408D64C04C"><enum>204.</enum><header>Reporting
requirements</header><text display-inline="no-display-inline">Section 3005 of
the Exchange Rates and International Economic Policy Coordination Act of 1988
(<external-xref legal-doc="usc" parsable-cite="usc/22/5305">22 U.S.C. 5305</external-xref>) is amended to read as follows:</text>
<quoted-block display-inline="no-display-inline" id="H35747A6B0C0647F59836A0ADBD5941E6" style="OLC">
<section id="H9CB70FB8D9B4493FAC11EF3577000F8"><enum>3005.</enum><header>Reporting
requirements</header>
<subsection id="HE95AEB948CA244E99243298DA3F920EF"><enum>(a)</enum><header>Reports
Required</header>
<paragraph id="HB1560F745BD5425592743E4239CC8325"><enum>(1)</enum><header>In
general</header><text>The Secretary, after consulting with the Chairman of the
Board, shall submit to Congress, on or before October 15 of each year, a
written report on international economic policy and currency exchange
rates.</text>
</paragraph><paragraph id="HC91F0AFF97ED487500BDF0F41FDE001F"><enum>(2)</enum><header>Interim
report</header><text>The Secretary, after consulting with the Chairman of the
Board, shall submit to Congress, on or before April 15 of each year, a written
report on interim developments with respect to international economic policy
and currency exchange rates.</text>
</paragraph></subsection><subsection id="HEC2E063570594AFC9E6809FE0233ACD8"><enum>(b)</enum><header>Contents of
Reports</header><text>Each report submitted under subsection (a) shall
contain—</text>
<paragraph id="H4C20AC3AD2D84FC686CD59B3BE8CD668"><enum>(1)</enum><text>an analysis of
currency market developments and the relationship between the United States
dollar and the currencies of major economies and United States trading
partners;</text>
</paragraph><paragraph id="H6D55FD8DE6724B31BB90A938C7F395BE"><enum>(2)</enum><text>a review of the
economic and financial policies of major economies and United States trading
partners and an evaluation of the impact that such policies have on currency
exchange rates;</text>
</paragraph><paragraph id="H75567D8DC594470BA7DD58CCE3028558"><enum>(3)</enum><text>a description of
any currency intervention by the United States or other major economies or
United States trading partners, or other actions undertaken to adjust the
actual exchange rate of the dollar;</text>
</paragraph><paragraph id="HBB52318DDC8944E68BBE621073392B38"><enum>(4)</enum><text>an evaluation of
the factors that underlie conditions in the currency markets, including—</text>
<subparagraph id="H13EAECD37EAD46D8AD8BE9B3A2FACB64"><enum>(A)</enum><text>monetary and
financial conditions;</text>
</subparagraph><subparagraph id="H7A6DA2A6ADB844A39DCE3A0665CA856"><enum>(B)</enum><text>foreign exchange
reserve accumulation;</text>
</subparagraph><subparagraph id="H895D4E33F6544447A572381F4C6CF334"><enum>(C)</enum><text>macroeconomic
trends;</text>
</subparagraph><subparagraph id="H8A4CAA3C14CE44D1A3D74780997BA523"><enum>(D)</enum><text>trends in current
and financial account balances;</text>
</subparagraph><subparagraph id="H94690D4FB89B4150815772A1A676C49"><enum>(E)</enum><text>the size and
composition of, and changes in, international capital flows;</text>
</subparagraph><subparagraph id="H9D4EE84E1B624F1AA8753C004D472543"><enum>(F)</enum><text>the impact of the
external sector on economic changes;</text>
</subparagraph><subparagraph id="H39145A758773408ABACA8470E3723066"><enum>(G)</enum><text>the size and
growth of external indebtedness;</text>
</subparagraph><subparagraph id="H4D642D8F70B34AF3A75CA09863C4F029"><enum>(H)</enum><text>trends in the net
level of international investment; and</text>
</subparagraph><subparagraph id="HB4FFB4BBB8644938B1AFDFAD439E564"><enum>(I)</enum><text>capital controls,
trade, and exchange restrictions;</text>
</subparagraph></paragraph><paragraph id="H7498C0614EA64F0FACA18000FEC515E6"><enum>(5)</enum><text>a list of
currencies of the major economies or economic areas that are manipulated or in
fundamental misalignment and a description of any economic models or
methodologies used to establish the list;</text>
</paragraph><paragraph id="H8497F5FDB36F4EF887AD5743C2A38358"><enum>(6)</enum><text>a description of
any reason or circumstance that accounts for why each currency identified under
paragraph (5) is manipulated or in fundamental misalignment based on a
generally accepted economic rationale;</text>
</paragraph><paragraph id="HFD1DA363199A44FC9BBA6BCF90E2EE5F"><enum>(7)</enum><text>a list of each
currency identified under paragraph (5) for which the manipulation or
fundamental misalignment causes, or contributes to, a material adverse impact
on the economy of the United States, including a description of any reason or
circumstance that explains why the manipulation or fundamental misalignment is
not accounted for under paragraph (6);</text>
</paragraph><paragraph id="HA2C15CC2FE9B4AF0905948EBE89C4600"><enum>(8)</enum><text>the results of any
prior consultations conducted or other steps taken; and</text>
</paragraph><paragraph id="H29E3FE76DE524F809568ECF8B9592DC6"><enum>(9)</enum><subparagraph commented="no" display-inline="yes-display-inline" id="HE1AAF498C1344772AAE3900046A7B453"><enum>(A)</enum><text>a list of each occasion
during the reporting period when the issue of exchange-rate misalignment was
raised in a countervailing duty proceeding under subtitle A of title VII of the
Tariff Act of 1930 or in an investigation under section 421 of the Trade Act of
1974;</text>
</subparagraph><subparagraph id="HB0BE8C708C5040CDA7D8BCBA8D607D96" indent="up1"><enum>(B)</enum><text>a summary in each such instance of
whether or not exchange-rate misalignment was found and the reasoning and data
underlying that finding; and</text>
</subparagraph><subparagraph id="H63E5613BFF59482FA583DE00C706ABA0" indent="up1"><enum>(C)</enum><text>a discussion regarding each
affirmative finding of exchange-rate misalignment to consider the circumstances
underlying that exchange-rate misalignment and what action appropriately has
been or might be taken by the Secretary apart from and in addition to import
relief to correct the exchange-rate misalignment.</text>
</subparagraph></paragraph></subsection><subsection id="H3A4AC156CE8E45AB9ECEAE0075669DFE"><enum>(c)</enum><header>Development of
Reports</header><text>The Secretary shall consult with the Chairman of the
Board with respect to the preparation of each report required under subsection
(a). Any comments provided by the Chairman of the Board shall be submitted to
the Secretary not later than the date that is 15 days before the date each
report is due under subsection (a). The Secretary shall submit the report after
taking into account all comments
received.</text>
</subsection></section><after-quoted-block>.</after-quoted-block></quoted-block>
</section><section id="H5BBFD769C057405C82C4084C7032CE55"><enum>205.</enum><header>International
financial institution governance arrangements</header>
<subsection id="H1C8D0EE8CE674376AFE6AF23C0EF2F29"><enum>(a)</enum><header>Initial
Review</header><text>Notwithstanding any other provision of law, before the
United States approves a proposed change in the governance arrangement of any
international financial institution, as defined in section 1701(c)(2) of the
International Financial Institutions Act (<external-xref legal-doc="usc" parsable-cite="usc/22/262r">22 U.S.C. 262r(c)(2)</external-xref>), the Secretary
of the Treasury shall determine whether any member of the international
financial institution that would benefit from the proposed change, in the form
of increased voting shares or representation, has a currency that is
manipulated or in fundamental misalignment, and if so, whether the manipulation
or fundamental misalignment causes or contributes to a material adverse impact
on the economy of the United States. The determination shall be reported to
Congress.</text>
</subsection><subsection id="HB86E91AA6CE244748B3C19E7C22E2C76"><enum>(b)</enum><header>Subsequent
Action</header><text>The United States shall oppose any proposed change in the
governance arrangement of any international financial institution (as defined
in subsection (a)) if the Secretary renders an affirmative determination
pursuant to subsection (a).</text>
</subsection><subsection id="HDD92D72CCDDE48528C98761D406BFC2"><enum>(c)</enum><header>Further
Action</header><text>The United States shall continue to oppose any proposed
change in the governance arrangement of an international financial institution,
pursuant to subsection (b), until the Secretary determines and reports to
Congress that the currency of each member of the international financial
institution that would benefit from the proposed change, in the form of
increased voting shares or representation, is neither manipulated nor in
fundamental misalignment.</text>
</subsection></section><section id="H95CAA7863D0044F49C3130E6CC200407"><enum>206.</enum><header>Nonmarket
economy status</header><text display-inline="no-display-inline">Paragraph
(18)(B)(vi) of section 771 of the Tariff Act of 1930 (19 U.S.C.
1677(18)(B)(vi)) is amended by inserting before the period at the end the
following: <quote>, including whether the currency of the foreign country has
been identified pursuant to section 3005(b)(7) of the Exchange Rates and
International Economic Policy Coordination Act of 1988 (<external-xref legal-doc="usc" parsable-cite="usc/22/5305">22 U.S.C. 5305(b)(7)</external-xref>)
in any written report required by such section 3005(b)(7) during the 24-month
period immediately preceding the month during which the administering authority
seeks to revoke a determination that such foreign country is a nonmarket
economy country</quote>.</text>
</section>