[Congressional Bills 111th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2378 Introduced in House (IH)]
111th CONGRESS
1st Session
H. R. 2378
To amend title VII of the Tariff Act of 1930 to clarify that
fundamental exchange-rate misalignment by any foreign nation is
actionable under United States countervailing and antidumping duty
laws, and for other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
May 13, 2009
Mr. Ryan of Ohio (for himself, Mr. Tim Murphy of Pennsylvania, Mr.
Altmire, Mr. Jones, Mr. DeFazio, Mr. Wilson of Ohio, Mr. Burton of
Indiana, Mr. Michaud, Mr. Souder, Mr. Shuler, Mr. McHugh, Mr. Coble,
Mr. Barrett of South Carolina, Mr. Boucher, Ms. Sutton, Mr. Platts, Mr.
Arcuri, Mr. Higgins, Mr. Boswell, Mr. Conyers, Mr. Gene Green of Texas,
Ms. Eddie Bernice Johnson of Texas, Mr. Costello, Mr. Lee of New York,
Mr. Holt, Mr. Westmoreland, Mr. Rohrabacher, Mr. Shuster, Mr. Braley of
Iowa, Mr. Wilson of South Carolina, Mr. Holden, Mr. Olver, Mr. Kagen,
Mr. Kildee, Mr. Hare, Mrs. Myrick, Mr. Visclosky, Mr. Manzullo, Mr.
Rogers of Michigan, and Mr. Brown of South Carolina) introduced the
following bill; which was referred to the Committee on Ways and Means
_______________________________________________________________________
A BILL
To amend title VII of the Tariff Act of 1930 to clarify that
fundamental exchange-rate misalignment by any foreign nation is
actionable under United States countervailing and antidumping duty
laws, and for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Currency Reform for Fair Trade
Act''.
SEC. 2. FINDINGS.
Congress makes the following findings:
(1) The strength, vitality, and stability of the United
States economy and, more broadly, the openness and
effectiveness of the global trading system are critically
dependent upon an international monetary regime of orderly and
flexible exchange rates.
(2) Increasingly in recent years, a number of foreign
governments have undervalued their currencies by means of
protracted, large-scale intervention directly or indirectly
through surrogates in foreign exchange markets, and this
fundamental misalignment has substantially contributed to
distortions in trade flows, unsustainable current account
imbalances, and serious competitive problems for countries like
the United States that permit their currencies to fluctuate in
response to changes in market forces.
(3) This exchange depreciation serves as a subsidy for, and
facilitates dumping of, exports from countries that engage in
this mercantilist practice.
(4) It is consistent with the agreements of the World Trade
Organization and the International Monetary Fund that United
States trade law be amended to clarify and make explicit that
fundamental undervaluation by an exporting country of its
currency is actionable as a countervailable export subsidy and
alternatively can be offset by antidumping duties when injury
to producers and workers in the United States is caused by such
subsidized and dumped imports.
SEC. 3. FUNDAMENTAL AND ACTIONABLE MISALIGNMENT OF A CURRENCY.
(a) In General.--Subtitle D of title VII of the Tariff Act of 1930
(19 U.S.C. 1677 et seq.) is amended by inserting after section 771B the
following new section:
``SEC. 771C. FUNDAMENTAL AND ACTIONABLE MISALIGNMENT OF A CURRENCY.
``(a) Fundamental and Actionable Undervaluation of a Currency.--For
purposes of subsection (c), the currency of an exporting country is
fundamentally and actionably undervalued if--
``(1) the real effective exchange rate of the exporting
country's currency is undervalued by at least 5 percent, on
average, during an 18-month period that represents the most
recent 18 months for which the information required under
subsection (c) is reasonably available, but that does not
include any time later than the final month in the period of
investigation or the period of review, as applicable;
``(2) during part or all of the 18-month period, the
government of the exporting country has engaged directly or
indirectly through surrogates in protracted, large-scale
intervention in foreign exchange markets, and that intervention
has involved the direct transfer of funds or the potential
direct transfer of funds or liabilities;
``(3) during part or all of the 18-month period, the
exporting country has experienced a significant and prolonged
global current account surplus;
``(4) during part or all of the 18-month period, the
exporting country has experienced a significant and prolonged
bilateral current account surplus with the United States; and
``(5) during part or all of the 18-month period, the
foreign exchange reserves held or controlled by the government
of the exporting country have exceeded the amount necessary to
repay its external debt obligations falling due within the
coming 12 months, except that the requirement of this paragraph
shall not be satisfied and no fundamental and actionable
undervaluation shall be found as to the currency of an
exporting country if the exporting country during any part of
the 18-month period has been allowed under article XII or
article XVIII, section B of the GATT 1994 (as defined in
section 2(1)(B) of the Uruguay Round Agreements Act (19 U.S.C.
3501(1)(B)) to impose restrictions to safeguard its balance of
payments.
``(b) Fundamental and Actionable Overvaluation of a Currency.--For
purposes of subsection (c), the currency of an exporting country is
fundamentally and actionably overvalued if--
``(1) the real effective exchange rate of the exporting
country's currency is overvalued by at least 5 percent, on
average, during an 18-month period that represents the most
recent 18 months for which the information required under
subsection (c) is reasonably available, but that does not
include any time later than the final month in the period of
investigation or the period of review, as applicable;
``(2) during part or all of the 18-month period, the
government of the exporting country has engaged directly or
indirectly through surrogates in protracted, large-scale
intervention in foreign exchange markets, and that intervention
has involved the direct transfer of funds or the potential
direct transfer of funds or liabilities;
``(3) during part or all of the 18-month period, the
exporting country has experienced a significant and prolonged
global current account deficit;
``(4) during part or all of the 18-month period, the
exporting country has experienced a significant and prolonged
bilateral current account deficit with the United States; and
``(5) during part or all of the 18-month period, the
foreign exchange reserves held or controlled by the government
of the exporting country have been less than the amount
necessary to repay its external debt obligations falling due
within the coming 12 months, except that the requirement of
this paragraph shall not be satisfied and no fundamental and
actionable overvaluation shall be found as to the currency of
an exporting country if the exporting country during any part
of the 18-month period has been allowed under article XII or
article XVIII, section B of the GATT 1994 (as defined in
section 2(1)(B) of the Uruguay Round Agreements Act (19 U.S.C.
3501(1)(B)) to impose restrictions to safeguard its balance of
payments.
``(c) Identification of Fundamental and Actionable Misalignment of
a Currency.--In calculating under subsection (a) or (b) whether the
currency of an exporting country was fundamentally and actionably
misaligned during the applicable 18-month period described in such
subsection, the administering authority shall--
``(1) measure the level of any such misalignment as the
simple average of the results yielded from application of the
macroeconomic-balance approach and the equilibrium-real-
exchange-rate approach;
``(2) rely upon data that are publicly available, reliable,
and compiled and maintained by the International Monetary Fund
or the World Bank or, if the International Monetary Fund or the
World Bank cannot provide such data, by other international
organizations or by national governments;
``(3) for the purposes of the initiation and the
preliminary and final determinations of an investigation and
for purposes of the preliminary and final results of a review,
rely upon data for an 18-month period that represents the most
recent 18 months for which the information needed under this
subsection is reasonably available at the time, but that does
not include any time later than the final month in the period
of investigation or the period of review, as applicable;
``(4) use inflation-adjusted, trade-weighted exchange
rates;
``(5) implement the macroeconomic-balance approach and the
equilibrium-real-exchange-rate approach using the methodologies
described in the guidelines of the International Monetary
Fund's Consultative Group on Exchange Rate Issues, whenever
possible; and
``(6) in the event that the guidelines of the International
Monetary Fund's Consultative Group on Exchange Rate Issues are
not available, employ generally accepted economic and
econometric techniques to implement the macroeconomic-balance
approach and the equilibrium-real-exchange-rate approach.
``(d) Identification of Undervaluation or Overvaluation of a
Currency During the Period of Investigation or the Period of Review.--
If fundamental and actionable misalignment within the meaning of
subsection (a) or (b) is identified under subsection (c) as to an
exporting country's currency for the applicable 18-month period
described in subsection (a) or (b), the administering authority shall--
``(1) calculate for the period of investigation or the
period of review, as applicable, the level of undervaluation or
overvaluation, as the case may be, of the real effective
exchange rate of the exporting country's currency in accordance
with the procedures, methodologies, and standards set forth in
subsection (c);
``(2) calculate for the period of investigation or the
period of review, as applicable, using the results from each
approach described in subsection (c)(1), the level of
undervaluation or overvaluation, as the case may be, of the
real exchange rate between the exporting country and the United
States, deriving such level from each level of undervaluation
or overvaluation, as the case may be, of the real effective
exchange rate determined under paragraph (1) by allocating
appreciations or depreciations, as the case may be, in the
bilateral real exchange rates of the exporting country to its
trading partners on the basis of the overall current account
balances of such trading partners; and
``(3) take the simple average of each level of
undervaluation or overvaluation, as the case may be, calculated
under paragraph (2) to measure the level of undervaluation or
overvaluation, as the case may be, of the bilateral real
exchange rate between the exporting country and the United
States.
``(e) Consideration of Undervaluation of a Currency in
Countervailing and Antidumping Duty Proceedings.--If the administering
authority determines under subsection (d) that the currency of an
exporting country was undervalued in relation to the United States
dollar during the period of investigation or the period of review, as
applicable--
``(1) in a countervailing duty proceeding, the
administering authority shall include in the net
countervailable subsidy the amount that reflects the level of
undervaluation determined under subsection (d)(3) in the
bilateral real exchange rate between the currency of the
exporting country and the United States dollar; and
``(2) in an antidumping duty proceeding, the administering
authority shall adjust the export price and constructed export
price downward by the amount that reflects the level of
undervaluation determined under subsection (d)(3) in the
bilateral real exchange rate between the currency of the
exporting country and the United States dollar.
``(f) Consideration of Overvaluation of a Currency in Antidumping
Duty Proceedings.--If the administering authority determines under
subsection (d) that the currency of an exporting country was overvalued
in relation to the United States dollar during the period of
investigation or the period of review, as applicable, the administering
authority shall adjust the export price and constructed export price
upward by the amount that reflects the level of overvaluation
determined under subsection (d)(3) in the bilateral real exchange rate
between the currency of the exporting country and the United States
dollar.
``(g) Type of Economy.--Any determination with respect to the
currency of an exporting country by the administering authority under
this section shall be made regardless of whether the exporting country
has a market economy, a nonmarket economy, or a combination thereof.
``(h) Definitions.--In this section:
``(1) Protracted, large-scale intervention in foreign
exchange markets.--
``(A) In general.--The term `protracted, large-
scale intervention in foreign exchange markets' means
involvement in foreign exchange markets by the
government of an exporting country, either directly or
indirectly through surrogates, in such a way as to
contribute significantly to fundamental and actionable
misalignment of the currency of the exporting country
within the meaning of subsection (a) or (b). Such
involvement may include one or more of the following:
``(i) Governmental purchases, sales, or
other exchanges of currencies in foreign
exchange markets.
``(ii) Requirement by law or policy of the
government of the exporting country that some
or all of the foreign currency earnings by an
exporter or producer in the exporting country
be converted into the currency of the exporting
country.
``(iii) Any other practice by the
government of the exporting country that has
the effect of causing fundamental and
actionable misalignment of the exchange rate of
the exporting country's currency and that
involves the direct transfer of funds or the
potential direct transfer of funds or
liabilities.
``(B) Rule of construction.--Fundamental and
actionable misalignment of the currency of an exporting
country within the meaning of subsection (a) or (b)
shall be attributed to the protracted, large-scale
intervention in foreign exchange markets by the
government of the exporting country unless it is
determined that such intervention was not a significant
cause of the fundamental and actionable misalignment.
``(2) Macroeconomic-balance approach.--The term
`macroeconomic-balance approach' means a methodology under
which the level of undervaluation or overvaluation of the real
effective exchange rate of the exporting country's currency is
defined as the change in the real effective exchange rate
needed to achieve equilibrium in the exporting country's
balance of payments.
``(3) Equilibrium-real-exchange-rate approach.--The term
`equilibrium-real-exchange-rate approach' means a methodology
under which the level of undervaluation or overvaluation of the
real effective exchange rate of the exporting country's
currency is defined as the difference between the observed real
effective exchange rate and the real effective exchange rate
predicted by an econometric model.''.
(b) Clerical Amendment.--The table of contents of title VII of the
Tariff Act of 1930 is amended by inserting after the item relating to
section 771B the following new item:
``Sec. 771C. Fundamental and actionable misalignment of a currency.''.
SEC. 4. CLARIFICATIONS REGARDING DEFINITION OF COUNTERVAILABLE SUBSIDY.
(a) Financial Contribution.--Section 771(5)(D) of the Tariff Act of
1930 (19 U.S.C. 1677(5)(D)) is amended by adding at the end the
following new sentence:
``A fundamentally and actionably undervalued currency (as
determined under section 771C) constitutes a financial contribution
under clause (i).''
(b) Benefit Conferred.--Section 771(5)(E) of the Tariff Act of 1930
(19 U.S.C. 1677(5)(E)) is amended--
(1) in clause (iii), by striking ``and'' at the end;
(2) in clause (iv), by striking the period at the end and
inserting ``, and''; and
(3) by inserting after clause (iv) the following new
clause:
``(v) in the case of a fundamentally and
actionably undervalued currency (as determined
under section 771C), if the exporter or
producer receives or is entitled to receive
more of the exporting country's currency in
exchange for the United States dollars paid for
the subject merchandise than if the exporting
country's currency were not fundamentally and
actionably undervalued.''.
(c) Specificity.--Section 771(5A)(B) of the Tariff Act of 1930 (19
U.S.C. 1677(5A)(B)) is amended by adding at the end the following new
sentence: ``For purposes of this subparagraph, a fundamentally and
actionably undervalued currency (as determined under section 771C)
constitutes an export subsidy.''.
SEC. 5. CLARIFICATIONS REGARDING DUMPING.
(a) Adjustments for Export Price and Constructed Export Price.--
Section 772(c) of the Tariff Act of 1930 (19 U.S.C. 1677a(c)) is
amended--
(1) in paragraph (1)--
(A) in subparagraph (B) by striking ``and'' at the
end; and
(B) by adding at the end the following new
subparagraph:
``(D) the amount that reflects the level of
overvaluation in the bilateral real exchange rate
between the exporting country and the United States (as
determined under section 771C), and''; and
(2) in paragraph (2)--
(A) in subparagraph (A) by striking ``and'' at the
end;
(B) in subparagraph (B), by striking the period at
the end and inserting ``, and''; and
(C) by adding at the end the following new
subparagraph:
``(C) the amount that reflects the level of
undervaluation in the bilateral real exchange rate
between the exporting country and the United States (as
determined under section 771C).''.
(b) Amendments to Definition of Nonmarket Economy Country.--Section
771(18)(B) of the Tariff Act of 1930 (19 U.S.C. 1677(18)(B)) is
amended--
(1) in clause (v), by striking ``and'' at the end;
(2) by redesignating clause (vi) as clause (vii); and
(3) by inserting after clause (v) the following new clause:
``(vi) whether in the view of the
administering authority the currency of the
foreign country is fundamentally and actionably
undervalued or fundamentally and actionably
overvalued (as determined under section 771C),
and''.
SEC. 6. APPLICATION TO GOODS FROM CANADA AND MEXICO.
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 (19 U.S.C. 3438), the amendments made by
this Act shall apply with respect to goods from Canada and Mexico.
SEC. 7. EFFECTIVE DATE.
The amendments made by this Act apply with respect to
countervailing and antidumping duty proceedings initiated under title
VII of the Tariff Act of 1930 before, on, or after the date of
enactment of this Act.
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