Episode 2, that’s right, the big wigs decided not to cancel us after the Pilot!
H.R. 2378 is being discussed in the Ways & Means Committee today and tomorrow. Our Executive Director, Jeremy Koulish has been livetweeting the hearing.
H.R. 2378: Currency Reform for Fair Trade Act
Sponsor: Rep. Tim Ryan (D-OH17)
Click here to download this summary (pdf)
Cosponsors: 133 (91 Democrats, 42 Republicans). Full list at http://thomas.loc.gov/cgi-bin/bdquery/z?d111:HR02378:@@@P
Status: In Ways & Means Committee. Hearing scheduled for 9/15/2010.
Senate Companion: S. 1027, sponsored by Sen. Debbie Stabenow (D-MI). In Finance Committee, no action scheduled.
Purpose: The competitiveness of American industry is purportedly hurt by currency manipulation abroad, particularly in China. This legislation would establish a process by which such manipulation would be offset with special subsidies and tariffs.
Summary: H.R. 2378 amends the Tariff Act of 1930 to provide a mechanism for determining whether the currency of an exporting country is being “fundamentally and actionably” manipulated.
Criteria for undervaluation/overvaluation include:
• The real effective exchange rate of the exporting country’s currency is undervalued/overvalued by an average of at least 5% during the past 18 months in which information is available;
• The country is engaged in large-scale intervention in foreign exchange markets;
• The country has recently experienced a significant and prolonged current account surplus/deficit, both globally and with the U.S. specifically;
• The country holds currency reserves more/less than the amount of external debt obligations due within the next year.
If the administering authority (the International Trade Administration in the Commerce Department) determines a manipulation has taken place, it can respond by imposing a countervailing subsidy or antidumping duty to correct for undervaluation and a corresponding suitable measure for overvaluation.
The bill may or may not violate WTO guidelines. A challenge is expected if H.R. 2378 is signed into law.
CBO Score: none provided
Supporters: Fair Currency Coalition, AFL-CIO, Steel Manufacturers Assn, etc.
• Supporters see this as a necessary measure to prevent China’s persistent currency manipulation and bring previously outsourced jobs back to the domestic economy.
Opposition: Chamber of Commerce, Business Roundtable, other industry groups. Possibly Obama Administration and Commerce Department.
• Opponents are generally wary of messing with China, think retaliatory measures would harm the U.S. economy and believe the bill violates WTO rules.
Full bill text: http://www.govtrack.us/congress/billtext.xpd?bill=h111-2378
Official CRS summary: http://www.govtrack.us/congress/bill.xpd?bill=h111-2378&tab=summary
Fair Currency Coalition summary and analysis: http://faircurrency.org/legislation.html
Sign-on opposition letter: http://www.uschina.org/public/documents/2010/07/house_letter_currency.pdf
Video of introduction press conference: http://www.youtube.com/watch?v=SZxp5f3-h9s
Politico article on Obama Administration’s lack of action towards China: http://www.politico.com/blogs/glennthrush/0810/Schumer_critical_of_Obama_administration_on_China_currency.html
Tune in tomorrow for Episode 3, H.R. 5029 the Economic Freedom Act.