[Congressional Record Volume 157, Number 151 (Tuesday, October 11, 2011)]
[Senate]
[Pages S6378-S6382]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
CURRENCY EXCHANGE RATE OVERSIGHT REFORM ACT OF 2011
The PRESIDING OFFICER. Under the previous order, the Senate will
resume consideration of S. 1619, which the clerk will report.
The assistant legislative clerk read as follows:
A bill (S. 1619) to provide for identification of
misaligned currency, require action to correct the
misalignment, and for other purposes.
Pending:
Reid amendment No. 694, to change the enactment date.
Amendment No. 694 Withdrawn
Mr. REID. Mr. President, I ask unanimous consent that the pending
amendment be withdrawn.
The PRESIDING OFFICER. Without objection, it is so ordered.
The clerk will read the bill for the third time.
The bill was ordered to be engrossed for a third reading and was read
the third time.
The PRESIDING OFFICER. Under the previous order, the bill having been
read the third time, the question is, Shall the bill pass?
Mr. DURBIN. Mr. President, I ask for the yeas and nays.
The PRESIDING OFFICER. Is there a sufficient second?
There appears to be a sufficient second.
The clerk will call the roll.
The assistant legislative clerk called the roll.
Mr. DURBIN. I announce that the Senator from New Hampshire (Mrs.
Shaheen) is necessarily absent.
Mr. KYL. The following Senator is necessarily absent: the Senator
from Oklahoma (Mr. Coburn).
The PRESIDING OFFICER. Are there any other Senators in the Chamber
desiring to vote?
The result was announced--yeas 63, nays 35, as follows:
[Rollcall Vote No. 159 Leg.]
YEAS--63
Akaka
Baucus
Begich
Bennet
Bingaman
Blumenthal
Boxer
Brown (MA)
Brown (OH)
Burr
Cardin
Carper
Casey
Chambliss
Cochran
Collins
Conrad
Coons
Crapo
Durbin
Feinstein
Franken
Gillibrand
Graham
Grassley
Hagan
Harkin
Hoeven
Isakson
Johanns
Johnson (SD)
Kerry
Klobuchar
Kohl
Landrieu
Lautenberg
Leahy
Levin
Manchin
Menendez
Merkley
Mikulski
Nelson (NE)
Nelson (FL)
Portman
Pryor
Reed
Reid
Risch
Rockefeller
Sanders
Schumer
Sessions
Shelby
Snowe
Stabenow
Tester
Udall (CO)
Udall (NM)
Warner
Webb
Whitehouse
Wyden
NAYS--35
Alexander
Ayotte
Barrasso
Blunt
Boozman
Cantwell
Coats
Corker
Cornyn
DeMint
Enzi
Hatch
Heller
Hutchison
Inhofe
Inouye
Johnson (WI)
Kirk
Kyl
Lee
Lieberman
Lugar
McCain
McCaskill
McConnell
Moran
Murkowski
Murray
Paul
Roberts
Rubio
Thune
Toomey
Vitter
Wicker
NOT VOTING--2
Coburn
Shaheen
The bill (S. 1619) was passed, as follows:
S. 1619
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 Exchange Rate
Oversight Reform Act of 2011''.
SEC. 2. DEFINITIONS.
In this Act:
(1) Administering authority.--The term ``administering
authority'' means the authority referred to in section 771(1)
of the Tariff Act of 1930 (19 U.S.C. 1677(1)).
(2) Agreement on government procurement.--The term
``Agreement on Government Procurement'' means the agreement
referred to in section 101(d)(17) of the Uruguay Round
Agreements Act (19 U.S.C. 3511(d)(17)).
(3) Country.--The term ``country'' means a foreign country,
dependent territory, or possession of a foreign country, and
may include an association of 2 or more foreign countries,
dependent territories, or possessions of countries into a
customs union outside the United States.
(4) Exporting country.--The term ``exporting country''
means the country in which the subject merchandise is
produced or manufactured.
(5) Fundamental misalignment.--The term ``fundamental
misalignment'' means a significant and sustained
undervaluation of the prevailing real effective exchange
rate, adjusted for cyclical and transitory factors, from its
medium-term equilibrium level.
(6) Fundamentally misaligned currency.--The term
``fundamentally misaligned currency'' means a foreign
currency that is in fundamental misalignment.
(7) Real effective exchange rate.--The term ``real
effective exchange rate'' means a weighted average of
bilateral exchange rates, expressed in price-adjusted terms.
(8) Secretary.--The term ``Secretary'' means the Secretary
of the Treasury.
(9) Sterilization.--The term ``sterilization'' means
domestic monetary operations taken to neutralize the monetary
impact of increases in reserves associated with intervention
in the currency exchange market.
(10) Subject merchandise.--The term ``subject merchandise''
means the merchandise subject to an antidumping
investigation, review, suspension agreement, or order
referred to in section 771(25) of the Tariff Act of 1930 (19
U.S.C. 1677(25)).
(11) WTO agreement.--The term ``WTO Agreement'' means the
agreement referred to in section 2(9) of the Uruguay Round
Agreements Act (19 U.S.C. 3501(9)).
[[Page S6379]]
SEC. 3. REPORT ON INTERNATIONAL MONETARY POLICY AND CURRENCY
EXCHANGE RATES.
(a) Reports Required.--
(1) In general.--Not later than March 15 and September 15
of each calendar year, the Secretary, after consulting with
the Chairman of the Board of Governors of the Federal Reserve
System and the Advisory Committee on International Exchange
Rate Policy, shall submit to Congress and make public, a
written report on international monetary policy and currency
exchange rates.
(2) Consultations.--On or before March 30 and September 30
of each calendar year, the Secretary shall appear, if
requested, before the Committee on Banking, Housing, and
Urban Affairs and the Committee on Finance of the Senate and
the Committee on Financial Services and the Committee on Ways
and Means of the House of Representatives to provide
testimony on the reports submitted pursuant to paragraph (1).
(b) Content of Reports.--Each report submitted under
subsection (a) shall contain the following:
(1) An analysis of currency market developments and the
relationship between the United States dollar and the
currencies of major economies and trading partners of the
United States.
(2) A review of the economic and monetary policies of major
economies and trading partners of the United States, and an
evaluation of how such policies impact currency exchange
rates.
(3) A description of any currency intervention by the
United States or other major economies or trading partners of
the United States, or other actions undertaken to adjust the
actual exchange rate relative to the United States dollar.
(4) An evaluation of the domestic and global factors that
underlie the conditions in the currency markets, including--
(A) monetary and financial conditions;
(B) accumulation of foreign assets;
(C) macroeconomic trends;
(D) trends in current and financial account balances;
(E) the size, composition, and growth of international
capital flows;
(F) the impact of the external sector on economic growth;
(G) the size and growth of external indebtedness;
(H) trends in the net level of international investment;
and
(I) capital controls, trade, and exchange restrictions.
(5) A list of currencies designated as fundamentally
misaligned currencies pursuant to section 4(a)(2), and a
description of any economic models or methodologies used to
establish the list.
(6) A list of currencies designated for priority action
pursuant to section 4(a)(3).
(7) An identification of the nominal value associated with
the medium-term equilibrium exchange rate, relative to the
United States dollar, for each currency listed under
paragraph (6).
(8) A description of any consultations conducted or other
steps taken pursuant to section 5, 6, or 7, including any
actions taken to eliminate the fundamental misalignment.
(9) A description of any determination made pursuant to
section 9(a).
(c) Consultations.--The Secretary shall consult with the
Chairman of the Board of Governors of the Federal Reserve
System and the Advisory Committee on International Exchange
Rate Policy with respect to the preparation of each report
required under subsection (a). Any comments provided by the
Chairman of the Board of Governors of the Federal Reserve
System or the Advisory Committee on International Exchange
Rate Policy 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 to Congress after taking into account all comments
received from the Chairman and the Advisory Committee.
SEC. 4. IDENTIFICATION OF FUNDAMENTALLY MISALIGNED
CURRENCIES.
(a) Identification.--
(1) In general.--The Secretary shall analyze on a
semiannual basis the prevailing real effective exchange rates
of foreign currencies.
(2) Designation of fundamentally misaligned currencies.--
With respect to the currencies of countries that have
significant bilateral trade flows with the United States, and
currencies that are otherwise significant to the operation,
stability, or orderly development of regional or global
capital markets, the Secretary shall determine whether any
such currency is in fundamental misalignment and shall
designate such currency as a fundamentally misaligned
currency.
(3) Designation of currencies for priority action.--The
Secretary shall designate a currency identified under
paragraph (2) for priority action if the country that issues
such currency is--
(A) engaging in protracted large-scale intervention in the
currency exchange market, particularly if accompanied by
partial or full sterilization;
(B) engaging in excessive and prolonged official or quasi-
official accumulation of foreign exchange reserves and other
foreign assets, for balance of payments purposes;
(C) introducing or substantially modifying for balance of
payments purposes a restriction on, or incentive for, the
inflow or outflow of capital, that is inconsistent with the
goal of achieving full currency convertibility; or
(D) pursuing any other policy or action that, in the view
of the Secretary, warrants designation for priority action.
(b) Reports.--The Secretary shall include a list of any
foreign currency designated under paragraph (2) or (3) of
subsection (a) and the data and reasoning underlying such
designations in each report required by section 3.
SEC. 5. NEGOTIATIONS AND CONSULTATIONS.
(a) In General.--Upon designation of a currency pursuant to
section 4(a)(2), the Secretary shall seek to consult
bilaterally with the country that issues such currency in
order to facilitate the adoption of appropriate policies to
address the fundamental misalignment.
(b) Consultations Involving Currencies Designated for
Priority Action.--With respect to each currency designated
for priority action pursuant to section 4(a)(3), the
Secretary shall, in addition to seeking to consult with a
country pursuant to subsection (a)--
(1) seek the advice of the International Monetary Fund with
respect to the Secretary's findings in the report submitted
to Congress pursuant to section 3(a); and
(2) encourage other governments, whether bilaterally or in
appropriate multinational fora, to join the United States in
seeking the adoption of appropriate policies by the country
described in subsection (a) to eliminate the fundamental
misalignment.
SEC. 6. FAILURE TO ADOPT APPROPRIATE POLICIES.
(a) In General.--Not later than 90 days after the date on
which a currency is designated for priority action pursuant
to section 4(a)(3), the Secretary shall determine whether the
country that issues such currency has adopted appropriate
policies, and taken identifiable action, to eliminate the
fundamental misalignment. The Secretary shall promptly notify
Congress of such determination and publish notice of the
determination in the Federal Register. If the Secretary
determines that the country that issues such currency has
failed to adopt appropriate policies, or take identifiable
action, to eliminate the fundamental misalignment, the
following shall apply with respect to the country until a
notification described in section 7(b) is published in the
Federal Register:
(1) Adjustment under antidumping law.--For purposes of an
antidumping investigation under subtitle B of title VII of
the Tariff Act of 1930 (19 U.S.C. 1673 et seq.), or a review
under subtitle C of such Act (19 U.S.C. 1675 et seq.), the
following shall apply:
(A) In general.--The administering authority shall ensure a
fair comparison between the export price and the normal value
by adjusting the price used to establish export price or
constructed export price to reflect the fundamental
misalignment of the currency of the exporting country.
(B) Sales subject to adjustment.--The adjustment described
in subparagraph (A) shall apply with respect to subject
merchandise sold on or after the date that is 30 days after
the date the currency of the exporting country is designated
for priority action pursuant to section 4(a)(3).
(2) Federal procurement.--
(A) In general.--The President shall prohibit the
procurement by the Federal Government of products or services
from the country.
(B) Exception.--The prohibition provided for in
subparagraph (A) shall not apply with respect to a country
that is a party to the Agreement on Government Procurement.
(3) Request for imf action.--The United States shall inform
the Managing Director of the International Monetary Fund of
the failure of the country to adopt appropriate policies, or
to take identifiable action, to eliminate the fundamental
misalignment, and the actions the country is engaging in that
are identified in section 4(a)(3), and shall request that the
Managing Director of the International Monetary Fund--
(A) consult with such country regarding the observance of
the country's obligations under article IV of the
International Monetary Fund Articles of Agreement, including
through special consultations, if necessary; and
(B) formally report the results of such consultations to
the Executive Board of the International Monetary Fund within
180 days of the date of such request.
(4) OPIC financing.--The Overseas Private Investment
Corporation shall not approve any new financing (including
insurance, reinsurance, or guarantee) with respect to a
project located within the country.
(5) Multilateral bank financing.--
(A) In general.--The Secretary shall instruct the United
States Executive Director at each multilateral bank to oppose
the approval of any new financing (including loans, other
credits, insurance, reinsurance, or guarantee) to the
government of the country or for a project located within the
country.
(B) Multilateral bank.--The term ``multilateral bank''
includes each of the international financial institutions
described in section 1701(c)(2) of the International
Financial Institutions Act (22 U.S.C. 262r).
(b) Waiver.--
(1) In general.--The President may waive any action
provided for under subsection (a) if the President determines
that--
(A) taking such action would cause serious harm to the
national security of the United States; or
(B) it is in the vital economic interest of the United
States to do so and taking such
[[Page S6380]]
action would have an adverse impact on the United States
economy greater than the benefits of such action.
(2) Notification.--The President shall promptly notify
Congress of a determination under paragraph (1) (and the
reasons for the determination, if made under paragraph
(1)(B)) and shall publish notice of the determination (and
the reasons for the determination, if made under paragraph
(1)(B)) in the Federal Register.
(c) Reports.--The Secretary shall describe any action or
determination pursuant to subsection (a) or (b) in the first
semiannual report required by section 3 after the date of
such action or determination.
SEC. 7. PERSISTENT FAILURE TO ADOPT APPROPRIATE POLICIES.
(a) Persistent Failure To Adopt Appropriate Policies.--Not
later than 360 days after the date on which a currency is
designated for priority action pursuant to section 4(a)(3),
the Secretary shall determine whether the country that issues
such currency has adopted appropriate policies, and taken
identifiable action, to eliminate the fundamental
misalignment. The Secretary shall promptly notify Congress of
such determination and shall publish notice of the
determination in the Federal Register. If the Secretary
determines that the country that issues such currency has
failed to adopt appropriate policies, or take identifiable
action, to eliminate the fundamental misalignment, in
addition to the actions described in section 6(a), the
following shall apply with respect to the country until a
notification described in subsection (b) is published in the
Federal Register:
(1) Action at the wto.--The United States Trade
Representative shall request consultations in the World Trade
Organization with the country regarding the consistency of
the country's actions with its obligations under the WTO
Agreement.
(2) Remedial intervention.--
(A) In general.--The Secretary shall consult with the Board
of Governors of the Federal Reserve System to consider
undertaking remedial intervention in international currency
markets in response to the fundamental misalignment of the
currency designated for priority action, and coordinating
such intervention with other monetary authorities and the
International Monetary Fund. In doing so, the Secretary shall
consider the impact of such intervention on domestic economic
growth and stability, including the impact on interest rates.
(B) Notice to country.--At the same time the Secretary
takes action under subparagraph (A), the Secretary shall
notify the country that issues such currency of the
consultations under subparagraph (A).
(b) Notification.--The Secretary shall promptly notify
Congress when a country that issues a currency designated for
priority action pursuant to section 4(a)(3) adopts
appropriate policies, or takes identifiable action, to
eliminate the fundamental misalignment, and publish notice of
the action of that country in the Federal Register.
(c) Waiver.--
(1) In general.--The President may waive any action
provided for under this section, or extend any waiver
provided for under section 6(b), if the President determines
that--
(A) taking such action would cause serious harm to the
national security of the United States; or
(B) it is in the vital economic interest of the United
States to do so, and that taking such action would have an
adverse impact on the United States economy substantially out
of proportion to the benefits of such action.
(2) Notification.--The President shall promptly notify
Congress of a determination under paragraph (1) (and the
reasons for the determination, if made under paragraph
(1)(B)) and shall publish notice of the determination (and
the reasons for the determination, if made under paragraph
(1)(B)) in the Federal Register.
(d) Disapproval of Waiver.--If the President waives an
action pursuant to subsection (c)(1)(B), or extends a waiver
provided for under section 6(b)(1)(B), the waiver shall cease
to have effect upon the enactment of a resolution of
disapproval described in section 8(a)(2).
(e) Reports.--The Secretary shall describe any action or
determination pursuant to subsection (a), (b), or (c) in the
first semiannual report required by section 3 after the date
of such action or determination.
SEC. 8. CONGRESSIONAL DISAPPROVAL OF WAIVER.
(a) Resolution of Disapproval.--
(1) Introduction.--If a resolution of disapproval is
introduced in the House of Representatives or the Senate
during the 90-day period (not counting any day which is
excluded under section 154(b)(1) of the Trade Act of 1974 (19
U.S.C. 2194(b)(1))), beginning on the date on which the
President first notifies Congress of a determination to waive
action with respect to a country pursuant to section
7(c)(1)(B), that resolution of disapproval shall be
considered in accordance with this subsection.
(2) Resolution of disapproval.--In this subsection, the
term ``resolution of disapproval'' means only a joint
resolution of the two Houses of the Congress, the sole matter
after the resolving clause of which is as follows: ``That
Congress does not approve the determination of the President
under ___________ of the Currency Exchange Rate Oversight
Reform Act of 2011 with respect to ______, of which Congress
was notified on _____.'', with the first blank space being
filled section 7(c)(1)(B) or section 6(b)(1)(B), whichever is
applicable, the second blank space being filled with the name
of the appropriate country, and the third blank space being
filled with the appropriate date.
(3) Procedures for considering resolutions.--
(A) Introduction and referral.--Resolutions of
disapproval--
(i) in the House of Representatives--
(I) may be introduced by any Member of the House;
(II) shall be referred to the Committee on Financial
Services and, in addition, to the Committee on Rules; and
(III) may not be amended by either Committee; and
(ii) in the Senate--
(I) may be introduced by any Member of the Senate;
(II) shall be referred to the Committee on Banking,
Housing, and Urban Affairs; and
(III) may not be amended.
(B) Committee discharge and floor consideration.--The
provisions of subsections (c) through (f) of section 152 of
the Trade Act of 1974 (other than paragraph (3) of such
subsection (f)) (19 U.S.C. 2192 (c) through (f)) (relating to
committee discharge and floor consideration of certain
resolutions in the House and Senate) apply to a resolution of
disapproval under this section to the same extent as such
subsections apply to joint resolutions under such section
152.
(b) Rules of House of Representatives and Senate.--This
section is enacted by Congress--
(1) as an exercise of the rulemaking power of the House of
Representatives and the Senate, respectively, and as such is
deemed a part of the rules of each House, respectively, and
the rules provided for in this section supersede other rules
only to the extent that they are inconsistent with such other
rules; and
(2) with the full recognition of the constitutional right
of either House to change the rules provided for in this
section (so far as relating to the procedures of that House)
at any time, in the same manner, and to the same extent as
any other rule of that House.
SEC. 9. INTERNATIONAL FINANCIAL INSTITUTION GOVERNANCE
ARRANGEMENTS.
(a) Initial Review.--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 (22 U.S.C.
262r(c)(2)), the Secretary 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 was designated
a currency for priority action pursuant to section 4(a)(3) in
the most recent report required by section 3. The
determination shall be reported to Congress.
(b) Subsequent Action.--The United States shall oppose any
proposed change in the governance arrangement of the
international financial institution (described in subsection
(a)), if the Secretary renders an affirmative determination
pursuant to subsection (a).
(c) Further Action.--The United States shall continue to
oppose any proposed change in the governance arrangement of
the international financial institution, pursuant to
subsection (b), until the Secretary determines and reports to
Congress that the proposed change would not benefit any
member of the international financial institution, in the
form of increased voting shares or representation, that has a
currency that is designated a currency for priority action
pursuant to section 4(a)(3).
SEC. 10. ADJUSTMENT FOR FUNDAMENTALLY MISALIGNED CURRENCY
DESIGNATED FOR PRIORITY ACTION.
(a) In General.--Subsection (c)(2) of section 772 of the
Tariff Act of 1930 (19 U.S.C. 1677a(c)(2)) is amended--
(1) by striking ``and'' at the end of subparagraph (A);
(2) by striking the period at the end of subparagraph (B)
and inserting ``, and''; and
(3) by adding at the end the following:
``(C) if required by section 6(a)(1) of the Currency
Exchange Rate Oversight Reform Act of 2011, the percentage by
which the domestic currency of the producer or exporter is
undervalued in relation to the United States dollar as
determined under section 771(37).''.
(b) Calculation Methodology.--Section 771 of the Tariff Act
of 1930 (19 U.S.C. 1677) is amended by adding at the end the
following:
``(37) Percentage undervaluation.--The administering
authority shall determine the percentage by which the
domestic currency of the producer or exporter is undervalued
in relation to the United States dollar by comparing the
nominal value associated with the medium-term equilibrium
exchange rate of the domestic currency of the producer or
exporter, identified by the Secretary pursuant to section
3(b)(7) of the Currency Exchange Rate Oversight Reform Act of
2011, to the official daily exchange rate identified by the
administering authority.''.
SEC. 11. CURRENCY UNDERVALUATION UNDER COUNTERVAILING DUTY
LAW.
(a) Investigation or Review.--Subsection (c) of section 702
of the Tariff Act of 1930 (19 U.S.C. 1671a(c)) is amended by
adding at the end the following:
``(6) Currency undervaluation.--For purposes of a
countervailing duty investigation
[[Page S6381]]
under this subtitle where the determinations under clauses
(i) and (ii) of paragraph (1)(A) are affirmative, or a review
under subtitle C of this title, the following shall apply:
``(A) In general.--The administering authority shall
initiate an investigation to determine whether currency
undervaluation by the government of a country or any public
entity within the territory of a country is providing,
directly or indirectly, a countervailable subsidy as
described in section 771(5), if--
``(i) a petition filed by an interested party (described in
subparagraph (C), (D), (E), (F), or (G) of section 771(9))
alleges the elements necessary for the imposition of the duty
imposed by section 701(a); and
``(ii) the petition is accompanied by information
reasonably available to the petitioner supporting those
allegations.
``(B) Designation of fundamentally misaligned currency for
priority action.--Upon designation of a currency as a
fundamentally misaligned currency for priority action
pursuant to section 4(a)(3) of the Currency Exchange Rate
Oversight Reform Act of 2011, the administering authority
shall initiate an investigation to determine whether the
country that issues such currency is providing, directly or
indirectly, a countervailable subsidy as defined in section
771(5), if--
``(i) a petition filed by an interested party (described in
subparagraph (C), (D), (E), (F), or (G) of section 771(9))
alleges the elements necessary for the imposition of the duty
imposed by section 701(a); and
``(ii) the petition is accompanied by information
reasonably available to the petitioner supporting those
allegations.''.
(b) Benefit Calculation Methodology.--Section 771 of the
Tariff Act of 1930 (19 U.S.C. 1677), as amended by section
10(b), is further amended by adding at the end the following:
``(38) Currency undervaluation benefit.--For purposes of a
countervailing duty investigation under subtitle A of this
title, or a review under subtitle C of this title, the
following shall apply:
``(A) In general.--If the administering authority
determines to investigate whether currency undervaluation is
a countervailable subsidy as defined in section 771(5), the
administering authority shall determine whether there is a
benefit to the recipient and measure such benefit by
comparing the simple average of the real exchange rates
derived from application of the macroeconomic-balance
approach and the equilibrium-real-exchange-rate approach to
the official daily exchange rate identified by the
administering authority. The administering authority shall
rely upon data that are publicly available, reliable, and
compiled and maintained by the International Monetary Fund or
the World Bank, or other international organizations or
national governments if International Monetary Fund or World
Bank data is not available.
``(B) Designation of fundamentally misaligned currency for
priority action.--In the case of designation of a currency as
a fundamentally misaligned currency for priority action
pursuant to section 4(a)(3) of the Currency Exchange Rate
Oversight Reform Act of 2011, the administering authority
shall determine whether there is a benefit to the recipient
and measure such benefit by comparing the nominal value
associated with the medium-term equilibrium exchange rate of
the currency of the exporting country, identified by the
Secretary pursuant to section 3(b)(7) of such Act, to the
official daily exchange rate identified by the administering
authority.
``(C) Definitions.--
``(i) Macroeconomic-balance approach.--The term
`macroeconomic-balance approach' means a methodology under
which the level of undervaluation 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, as such methodology is described in the guidelines
of the International Monetary Fund's Consultative Group on
Exchange Rate Issues, if available.
``(ii) Equilibrium-real-exchange-rate approach.--The term
`equilibrium-real-exchange-rate approach' means a methodology
under which the level of undervaluation 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, as such
methodology is described in the guidelines of the
International Monetary Fund's Consultative Group on Exchange
Rate Issues, if available.
``(iii) Real exchange rates.--The term `real exchange
rates' means the bilateral exchange rates derived from
converting the trade-weighted multilateral exchange rates
yielded by the macroeconomic-balance approach and the
equilibrium-real-exchange-rate approach into real bilateral
terms.''.
(c) 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: ``The fact that a subsidy may
also be provided in circumstances that do not involve export
shall not, for that reason alone, mean that the subsidy
cannot be considered contingent upon export performance.''.
(d) Effective Date.--The amendments made by this section
apply to countervailing duty investigations initiated under
subtitle A of title VII of the Tariff Act of 1930 (19 U.S.C.
1671 et seq.) and reviews initiated under subtitle C of title
VII of such Act (19 U.S.C. 1675 et seq.) before, on, or after
the date of the enactment of this Act.
SEC. 12. NONMARKET ECONOMY STATUS.
Paragraph (18)(B) of section 771 of the Tariff Act of 1930
(19 U.S.C. 1677(18)(B)) is amended--
(1) by striking ``and'' at the end of clause (v); and
(2) by redesignating clause (vi) as clause (vii) and
inserting after clause (v) the following:
``(vi) whether the currency of the foreign country is
designated, or has been designated at any time over the 5
years prior to review of nonmarket economy status, a currency
for priority action pursuant to section 4(a)(3) of the
Currency Exchange Rate Oversight Reform Act of 2011, and''.
SEC. 13. APPLICATION TO 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 (19 U.S.C. 3438), section
6(a)(1) and the amendments made by sections 10, 11, and 12
shall apply with respect to goods from Canada and Mexico.
SEC. 14. ADVISORY COMMITTEE ON INTERNATIONAL EXCHANGE RATE
POLICY.
(a) Establishment.--
(1) In general.--There is established an Advisory Committee
on International Exchange Rate Policy (in this section
referred to as the ``Committee''). The Committee shall be
responsible for--
(A) advising the Secretary in the preparation of each
report to Congress on international monetary policy and
currency exchange rates, provided for in section 3; and
(B) advising Congress and the President with respect to--
(i) international exchange rates and financial policies;
and
(ii) the impact of such policies on the economy of the
United States.
(2) Membership.--
(A) In general.--The Committee shall be composed of 9
members as follows, none of whom shall be employees of the
Federal Government:
(i) Congressional appointees.--
(I) Senate appointees.--Four persons shall be appointed by
the President pro tempore of the Senate, upon the
recommendation of the chairmen and ranking members of the
Committee on Banking, Housing, and Urban Affairs and the
Committee on Finance of the Senate.
(II) House appointees.--Four persons shall be appointed by
the Speaker of the House of Representatives upon the
recommendation of the chairmen and ranking members of the
Committee on Financial Services and the Committee on Ways and
Means of the House of Representatives.
(ii) Presidential appointee.--One person shall be appointed
by the President.
(B) Qualifications.--Persons shall be selected under
subparagraph (A) on the basis of their objectivity and
demonstrated expertise in finance, economics, or currency
exchange.
(3) Terms.--Members shall be appointed for a term of 4
years or until the Committee terminates. An individual may be
reappointed to the Committee for additional terms.
(4) Vacancies.--Any vacancy in the Committee shall not
affect its powers, but shall be filled in the same manner as
the original appointment.
(b) Duration of Committee.--Notwithstanding section 14(c)
of the Federal Advisory Committee Act (5 U.S.C. App.), the
Committee shall terminate on the date that is 4 years after
the date of the enactment of this Act unless renewed by the
President pursuant to section 14 of the Federal Advisory
Committee Act (5 U.S.C. App.) for a subsequent 4-year period.
The President may continue to renew the Committee for
successive 4-year periods by taking appropriate action prior
to the date on which the Committee would otherwise terminate.
(c) Public Meetings.--The Committee shall hold at least 2
public meetings each year for the purpose of accepting public
comments, including comments from small business owners. The
Committee shall also meet as needed at the call of the
Secretary or at the call of two-thirds of the members of the
Committee.
(d) Chairperson.--The Committee shall elect from among its
members a chairperson for a term of 4 years or until the
Committee terminates. A chairperson of the Committee may be
reelected chairperson but is ineligible to serve consecutive
terms as chairperson.
(e) Staff.--The Secretary shall make available to the
Committee such staff, information, personnel, administrative
services, and assistance as the Committee may reasonably
require to carry out its activities.
(f) Application of Federal Advisory Committee Act.--
(1) In general.--The provisions of the Federal Advisory
Committee Act (5 U.S.C. App.) shall apply to the Committee.
(2) Exception.--Except for the 2 annual public meetings
required under subsection (c), meetings of the Committee
shall be exempt from the requirements of subsections (a) and
(b) of sections 10 and 11 of the Federal Advisory Committee
Act (relating to open meetings, public notice, public
participation, and public availability of documents),
whenever and to the extent it is determined by the President
or the Secretary that such meetings will be concerned with
matters the disclosure of which would seriously compromise
the development by the United States Government of monetary
and financial policy.
[[Page S6382]]
SEC. 15. REPEAL OF THE EXCHANGE RATES AND ECONOMIC POLICY
COORDINATION ACT OF 1988.
The Exchange Rates and International Economic Policy
Coordination Act of 1988 (22 U.S.C. 5301 et seq.) is
repealed.
Mr. UDALL of Colorado. Mr. President, I rise to discuss the recent
vote on the Currency Exchange Rate Oversight Reform Act of 2011 that
just passed in the Senate. The issue of currency misalignment and
manipulation has brought to the surface a myriad of concerns that face
our country's workers and businesses.
Coloradans are concerned that American businesses and producers are
unable to compete fairly in the global marketplace when foreign
countries keep the value of their currency artificially low. Those who
have both supported and opposed this legislation agree that the
artificial undervaluation of foreign currency has had a negative impact
on the competitiveness of U.S. exports and that it needs to be
remedied. In the case of China, numerous economists have estimated that
its currency is undervalued by anywhere from 12 to 50 percent. The
International Monetary Fund and the U.S. Treasury are also among those
who have determined that the undervaluation of Chinese currency is
real.
The implications of this artificial undervaluation include a
detrimental effect on the competiveness of U.S. products abroad, making
Chinese products artificially cheaper than U.S. products. The National
Association of Manufacturers has affirmed ``that the excessive
valuation of the dollar [relative to foreign currencies] simply prices
U.S. exports out of the market.'' They highlight that their members
``have made it clear that the number-one factor affecting their exports
is the value of the dollar.''
We can agree that artificial undervaluation of currency is a serious
problem that harms our economy, our worldwide competitiveness, and our
American workers. And it needs to be addressed. Yet the principle
challenge here has been how we should ultimately go about making sure
our economic partners, such as China, are honoring shared commitments
to compete on a level playing field.
I understand the concerns of both sides in this debate and I know
that many American businesses that have a presence in China and across
our globe are concerned about the potential for retaliatory action from
China. These companies, many of which also face ongoing issues of
inadequate protection of intellectual property, discriminatory
indigenous innovation and other industrial policies that limit access
to Chinese markets, are understandably worried that China would further
restrict their markets to fair competition.
I have also heard the frustration of domestic producers and U.S.
workers who, together, produce a whole host of products in the U.S. and
have felt the direct effect of being unable to compete fairly due to
the discounting effect that China's currency undervaluation has on
Chinese imports.
All of these concerns are valid, and despite some of my Senate
colleagues' disagreement on whether to support the legislation that
came before us, the common denominator in this debate has been a desire
for fairness. And I believe that we will move closer to achieving
fairness in the market place with a clearer commitment to a market-
based exchange rate from our trade and economic partners.
As sovereign nations, we all have the economic well being of our
respective countries at heart, but that does not justify the use of
unfair trade practices, and we cannot turn a blind eye when this
happens. Nor should we allow the specter of a ``trade war'' to distract
us from the fact that China is not abiding by the international rules
that were put in place to help prevent trade wars in the first place.
China agreed to abide by these rules of the international community--
including rules about intellectual property rights and unfair
restrictions to market access, as well as rules against intentional
currency misalignment--and we should not accept their adherence to
certain rules but not others. They all apply.
After taking a closer look at the issue of China's currency
undervaluation, taking into consideration the concerns that I have
heard on this issue from a range of Coloradans, and reviewing the
legislative proposal that was before us, I believed that the U.S.
Senate needed to send a signal to China, and others who may be
intentionally undervaluing their currencies. The message is that
Americans value playing by the rules and that we expect our trade
partners to live up to our shared commitment to compete fairly in the
global marketplace.
I ultimately came to the conclusion that this bipartisan legislation,
known as the Currency Exchange Rate Oversight Reform Act of 2011, was
an appropriate way to send a signal that we are serious about working
bilaterally and/or multilaterally, in a manner consistent with World
Trade Organization agreements, to develop a responsible plan so that
currencies identified as fundamentally misaligned can be valued
appropriately based on relevant market factors. In the event that the
misaligned currency goes unresolved, the legislation also authorizes
the administration to take action to protect American businesses and
workers from the discounting effect that the undervaluation of the
currency can have on imports from the respective country. I believe
that the mechanisms built into this legislation can promote a
collaborative effort to address any undervaluation of a foreign
currency, while also sending the message that we cannot allow American
businesses to be undercut.
My choice to support this legislation aligns best with the common
sense and pragmatic thinking of Coloradans. Unfortunately, China
continues to characterize efforts on the part of the United States to
ensure a level playing field for international trade as
``protectionist.'' Supporting fair competition, fair access to markets
and fulfillment of the commitments of our shared expectations among
economic and trade partners is far from protectionist. As former
President Ronald Reagan once stated, ``To make the international
trading system work, all must abide by the rules.'' I urge China to act
in good faith and to remain committed to reaching economic stability
through cooperative action that encourages fair competition. The
legislation I just supported is one component to reaching that goal,
and I believe it supports the American businesses and workers who are
propelling our nation to continue to be the leader in the global
economic race.
Mr. WARNER. Mr. President, I rise today to discuss S. 1619, known as
the China Currency bill. I voted for that bill today because China has
not made the progress that the U.S. and other countries have sought on
currency issues. These currency issues can lead to economic distortions
that cost the American economy jobs and increase economic risks for the
global economy. Ideally, we would address these problems through
negotiations with China and some other countries, but that course that
has not yet yielded significant results. I hope we will make better
progress on these currency issues in the future, and then perhaps
legislation such as this won't be necessary. This bill is not perfect;
ideally it would more clearly distinguish countries with unhelpful
currency policies, from those which have taken a more measured course
in managing their economies and currency. I would rather not resort to
sanctions or countervailing duties, but the lack of progress on
currency issues has made it appropriate to consider the steps set forth
in this bill. While the final version of this legislation is not
precisely as I would have written it, it is appropriate for the
Congress to be heard on this issue, so tonight I voted for this bill. I
hope that in the near future, we can resolve all of our currency issues
with China and other nations.
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