China Currency Bill Introduced in House
Representatives Phil English (R-PA), Mark Green (R-WI), Chris Chocola (R-IN) and Robin Hayes (R-NC ) yesterday introduced H.R. 3004, the Currency Harmonization Initiative through Neutralizing Action (CHINA) Act of 2005, that would impose automatic tariffs on China if the Treasury Department finds China's exchange rate policy conforms with the WTO definition of currency manipulation.
The CHINA Act would direct the Treasury Secretary to, within 60 days of enactment, analyze and report to Congress whether China's exchange rate policy deviates from the intent of both General Agreement on Tariffs and Trade (GATT) 1994 or relevant International Monetary Fund (IMF) agreements. Article XV of GATT 1994 prohibits WTO members from, by exchange rate action, frustrating the intent of the provisions of that Agreement, or, by trade action, the intent of the provisions of the Articles of Agreement of the IMF. The IMF prohibits the use of currency manipulation as a method of gaining unfair trade advantage; defining such manipulation as large-scale and protracted intervention in one direction to gain an unfair trade advantage. If the Secretary finds in the affirmative, then within 30 days after sending the report to Congress, the Secretary is required to levy tariffs equal to the percentage of manipulation found.
H.R. 3004 would require the Bush Administration to take faster action than S. 295, the bill introduced by Senator Schumer (D-NY) that would impose a 27.5% tariff on imports from China unless the Chinese government revalued its currency within six months. S. 295 also contains a provision allowing the White House to delay that action for up to two years. Both S.295 and H.R. 3004 are opposed by the Bush Administration.
On a related note, the Senate Finance Committee will hold a hearing on U.S.-China Economic Relations on June 23, 2005, at 10:00 a.m. in room SDG50 of the Dirksen Senate Office Building.
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