WASHINGTON, D.C. — As Congress prepares to review the Administration’s trade agenda, a bipartisan group of senators unveiled legislation to stand up for American jobs and American manufacturers by holding accountable countries – like China – that cheat trade law by manipulating their currency. U.S. Sens. Sherrod Brown (D-OH), Jeff Sessions (R-AL), Charles E. Schumer (D-NY), Lindsey Graham (R-SC), Debbie Stabenow (D-MI), and Richard Burr (R-NC) outlined The Currency Undervaluation Investigation Act, legislation that would reform and enhance oversight of currency exchange rates.
“Instead of addressing our growing trade deficit, we’re pursuing trade deals with countries that manipulate their currency,” Brown said. “Foreign companies who don’t play by the rules are actively trying to undermine the effectiveness of our trade laws. It’s time to level the playing field for American manufacturers and workers – the most competitive in the world. This bipartisan bill would create jobs and ensure American business can compete – at no cost to taxpayers.”
“America has always been a trading nation, but a trade relationship is like a contract: both parties must agree and play by the same set of rules,” Sessions said. “When one of our trading partners harms American workers by skirting the rules, we have an obligation to respond in their defense. I hope the Senate will again bring up this commonsense legislation for a vote, and I’m confident it will again pass with strong bipartisan support.”
“For far too long, China, Japan and other countries have rigged the rules of the game and millions of American workers have lost their jobs,” Schumer said. “While these countries have manipulated their currency, American manufacturing has been hollowed out – it’s time to put those days in the rear view mirror. If we are going to even consider passing a free trade agreement with Asian countries, Congress must pass and the President must sign a tough currency bill."
“It is universally accepted that China and other major countries intentionally manipulate their currency to create an advantage for themselves in the marketplace” Graham said. “Manufacturing jobs in South Carolina and across the country are being destroyed because the Chinese and others continue to defy the rules of international trade.”
“When countries like China and Japan cheat, American workers and manufacturers lose,” Stabenow said. “It’s time to stop unfair trade practices like currency manipulation and hold countries accountable when they don’t play by the rules.”
“With more U.S. jobs at stake every year, we must stand up to protect Americans from unfair trade practices by countries who fight dirty via currency manipulation,” Burr said. “This legislation to hold those countries accountable is long overdue."
The Peterson Institute estimates that that interventions in currency markets by foreign governments have cost U.S. workers as many as five million jobs over the last decade by making it more difficult for U.S. exporters to compete in other countries and by subsidizing their exports. The Economic Policy Institute further found that ending currency manipulation could reduce the U.S. trade deficit by as much as $500 billion within three years, increase GDP by as much as $720 billion, and create as many as 5.8 million American jobs—all while reducing the federal budget deficit by as much as $266 billion.
The Currency Undervaluation Investigation Act would use U.S. trade law to counter the economic harm to U.S. manufacturers caused by currency manipulation, and provide consequences for countries that fail to adopt appropriate policies to eliminate currency misalignment.
The bill would require the Commerce Department to treat currency manipulation as an illegal subsidy and impose applicable duties.
Under existing trade laws, if the Commerce Department and the International Trade Commission find that subsidized imports are causing economic harm to American manufacturers and workers, the administration must impose duties on those imports to offset (“countervail”) the benefit conferred on foreign producers and exporters by the government subsidies.
While the Department of Commerce already has authority under U.S. law to investigate whether currency undervaluation by a government provides a countervailable subsidy, it has repeatedly failed to do so despite repeated requests from a wide range of U.S. industries.
The Currency Undervaluation Investigation Act would require the Department of Commerce to investigate whether currency undervaluation by a government provides a countervailable subsidy if a U.S. industry requests an investigation and provides proper documentation.
In previous countervailing duty investigations, the Department of Commerce has refused to find an export subsidy if the subsidy is not limited exclusively to circumstances of export (i.e., when non-exporters may also benefit). The bill would preclude the Department of Commerce from imposing this bright-line rule, and would clarify that Commerce may not refuse to investigate a subsidy allegation based on the single fact that a subsidy is available in circumstances in addition to export. This clarification is supported by dispute settlement rulings of the World Trade Organization’s Appellate Body.