WASHINGTON, D.C. — As Congress prepares to review the Administration’s trade agenda, U.S. Sen. Sherrod Brown (D-OH) led a bipartisan group of senators in unveiling legislation to stand up for American jobs and American manufacturers by holding accountable countries – like China – that cheat trade law by manipulating their currency. The Currency Undervaluation Investigation Act would reform and enhance oversight of currency exchange rates. Addressing currency manipulation could create up to 250,000 Ohio jobs.
“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.”
A Feb. 2014 report by the Economic Policy Institute (EPI) found that ending currency manipulation could:
- Create up to 250,000 Ohio jobs;
- Reduce Ohio’s unemployment rate by up to 2.7 percentage points;
- Create up to 75,900 Ohio manufacturing jobs;
- Increase Ohio’s Gross Domestic Policy (GDP) output by up to $17.4 billion; and
- Raise up to $3.7 billion for Ohio and its local communities as output growth leads to increased tax revenues and spending reductions.
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 – cosponsored by U.S. Sens. Jeff Sessions (R-AL), Charles E. Schumer (D-NY), Lindsey Graham (R-SC), Debbie Stabenow (D-MI), and Richard Burr (R-NC) – 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.