[Congressional Record Volume 151, Number 60 (Tuesday, May 10, 2005)]
[Extensions of Remarks]
[Pages E920-E921]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




         IN SUPPORT OF THE FAIR CURRENCY PRACTICES ACT OF 2005

                                 ______
                                 

                        HON. DONALD A. MANZULLO

                              of illinois

                    in the house of representatives

                         Tuesday, May 10, 2005

  Mr. MANZULLO. Mr. Speaker, a country that manipulates its currency 
for the purposes of gaining an advantage in foreign markets violates 
many of the basic rules of the international monetary system 
established after World War II. However, despite repeated evidence that 
numerous countries are not letting market forces determine the value of 
their currency, our nation's laws set an extremely high threshold for 
us to take any effective action against other nations that intervene 
heavily in currency markets. The main purpose of the Fair Currency 
Practices Act of 2005 is to give our government agencies the tools they 
need to effectively combat illegal foreign government intervention in 
the global currency markets, particularly those efforts that are 
specifically designed to boost their local economy at the expense of 
the workers of the United States.
  The Fair Currency Practices Act of 2005 has three key provisions. The 
first would alter the criteria by which the Treasury Department is 
required to enter into negotiations with foreign countries that it 
labels as currency manipulators. The second would further clarify the 
working definition of manipulation under the Exchange Rates and 
International Economic Policy Coordination Act of 1998. Finally, the 
Fair Currency Practices Act of 2005 would instruct the U.S. Treasury 
Department to undertake an extensive examination of China's trade 
surplus, with particular attention paid to China's suspect trade data, 
and report on its findings.
  Current law requires that Treasury regularly make a determination of 
whether countries are manipulating the rate of exchange between their 
currency and the U.S. dollar for purposes of preventing effective 
balance of payments adjustments or gaining an unfair competitive 
advantage in international trade. If The Secretary of Treasury 
considers that such manipulation is occurring with respect to countries 
that (1) have material global current account surpluses and (2) have 
significant bilateral trade surpluses with the United States, the 
Secretary is required to take action to initiate negotiations with such 
foreign countries on an expedited basis. The Fair Currency Practices 
Act of 2005 amends the 1988 Omnibus Trade

[[Page E921]]

Act by eliminating the necessity that a country has both a significant 
bilateral trade surplus with the United States and a material global 
current account surplus, before the Secretary of the Treasury is 
required to enter into negotiations with the offending country to end 
its unfair practices. The change requires such negotiations if there is 
either a significant bilateral trade surplus with the United States or 
a material global current account surplus.
  Under current law, even if manipulation is found, Treasury is not 
required to act unless the offending country has both a significant 
bilateral trade surplus with the U.S. and a material global current 
account surplus. Treasury repeatedly fails to make a determination that 
certain countries, most notably China, are manipulating their currency. 
The 1988 Trade Act unfortunately does not specifically define 
``manipulating.'' The Fair Currency Practices Act of 2005 clarifies 
that a country engaged in ``protracted large-scale intervention in one 
direction in the exchange market'' is manipulating its currency. 
However, the Fair Currency Practices Act of 2005 does not preclude the 
Secretary of Treasury from finding a country to be manipulating its 
rate of exchange based on any other factor or combination of factors.

  Finally, the bill addresses a problem with the way Treasury 
determines China's global current account and trade balances. 
Currently, the U.S. Treasury Department and the International Monetary 
Fund (IMF) use official Chinese statistics, which differ markedly from 
the aggregate statistics of its trading partners. This results in an 
inaccurate depiction of China's true surplus, which is presumably much 
larger than reported by China. The Fair Currency Practices Act of 2005 
requires that Treasury undertake an examination of China's trade 
surplus and report to the Congress on why China's reported trade 
surpluses differ from those reported by its trading partner countries.
  Mr. Speaker, all nations, most particularly China, must let the free 
markets determine the value of their currency, not use government 
resources to artificially depress the value of a nation's currency to 
boost their economic growth. This scheme costs U.S. manufacturers 
billions of dollars in lost exports and decreased market share in the 
U.S. each year while putting American workers on the unemployment 
lines. We all know the specific problems in dealing with China--in 
2004, the U.S. trade deficit with China reached a record level of $162 
billion, the highest with any country in U.S. history. Yet, while 
China's economy has certainly grown and strengthened in recent years, 
China's currency has been tightly pegged to the U.S. dollar ever since 
1994. Most economists believe that China's currency is overvalued at 
between 15 to 40 percent, making U.S. goods much more expensive in 
China and Chinese goods in the U.S. much more attractive to buy (at the 
expense of similarly-made U.S. products), contributing to as much as 25 
percent of our bilateral trade deficit. China is long due for a 
correction in its currency value to reflect its global economic 
prowess. Americans stand ready to compete with anyone in the world. But 
the competition must be fair. The Fair Currency Practices Act of 2005 
will give our government the tools necessary to hold all nations of the 
world accountable for currency manipulation (not just China) and level 
the playing field for our workers.

                          ____________________