Clarification regarding definition of countervailable subsidy

(a)

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 in which the currency of a country in which the subject merchandise is produced is exchanged for foreign currency obtained from export transactions, and the currency of such country is a fundamentally undervalued currency, as defined in paragraph (37), the difference between the amount of the currency of such country provided and the amount of the currency of such country that would have been provided if the real effective exchange rate of the currency of such country were not undervalued, as determined pursuant to paragraph (38).

(b)

Export subsidy

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: In the case of a subsidy relating to a fundamentally undervalued currency, the fact that the subsidy may also be provided in circumstances not involving export shall not, for that reason alone, mean that the subsidy cannot be considered contingent upon export performance.. (c)

Definition of fundamentally undervalued currency

Section 771 of the Tariff Act of 1930 (19 U.S.C. 1677) is amended by adding at the end the following new paragraph:

(37)

Fundamentally undervalued currency

The administering authority shall determine that the currency of a country in which the subject merchandise is produced is a fundamentally undervalued currency if— (A)the government of the country (including any public entity within the territory of the country) engages in protracted, large-scale intervention in one or more foreign exchange markets during part or all of the 18-month period that represents the most recent 18 months for which the information required under paragraph (38) is reasonably available, but that does not include any period of time later than the final month in the period of investigation or the period of review, as applicable; (B)the real effective exchange rate of the currency is undervalued by at least 5 percent, on average and as calculated under paragraph (38), relative to the equilibrium real effective exchange rate for the country’s currency during the 18-month period; (C)during the 18-month period, the country has experienced significant and persistent global current account surpluses; and (D)during the 18-month period, the foreign asset reserves held by the government of the country exceed— (i)the amount necessary to repay all debt obligations of the government falling due within the coming 12 months; (ii)20 percent of the country’s money supply, using standard measures of M2; and (iii)the value of the country’s imports during the previous 4 months.

(d)

Definition of real effective exchange rate undervaluation

Section 771 of the Tariff Act of 1930 (19 U.S.C. 1677), as amended by subsection (c) of this section, is further amended by adding at the end the following new paragraph:

(38)

Real effective exchange rate undervaluation

The calculation of real effective exchange rate undervaluation, for purposes of paragraph (5)(E)(v) and paragraph (37), shall— (A)(i)rely upon, and where appropriate be the simple average of, the results yielded from application of the approaches described in the guidelines of the International Monetary Fund’s Consultative Group on Exchange Rate Issues; or (ii)if the guidelines of the International Monetary Fund’s Consultative Group on Exchange Rate Issues are not available, be based on generally accepted economic and econometric techniques and methodologies to measure the level of undervaluation; (B)rely upon data that are publicly available, reliable, and compiled and maintained by the International Monetary Fund or, if the International Monetary Fund cannot provide the data, by other international organizations or by national governments; and (C)use inflation-adjusted, trade-weighted exchange rates.