Washington, D.C.   -  U.S. Rep. Phil English (R-Pa.) along with U.S. Reps. Robin Hayes (R-N.C.) and Thomas Reynolds (R-N.Y.) are paving the way for Washington’s much anticipated China currency debate.   Today, the Republican lawmakers touted the Currency Harmonization Initiative through Neutralizing Action (CHINA) Act of 2007, to impose automatic tariffs if the Treasury Department finds that China is manipulating its currency to gain a trade advantage. 

“American manufacturers have labored for years under the burden of an unfair monetary regime which allows the Chinese to sell their products at substantially below the cost of raw materials.  The Chinese currency regime is a poison pill in the global trading system and one that threatens America’s manufacturing base,” said English, the prime sponsor of the bill.  “Congress has stood by too long while the Administration has failed to produce a real change in policy by China.  The time has come for Congress to accept fewer unfair imports and fewer empty excuses from a Chinese manufacturing sector that refuses to play by the rules, even as it demands a seat at the table.  Unless China predicts concrete, not cosmetic changes in its currency policy, it is imperative that Congress act this year.” 
 
 The CHINA Act, originally spearheaded by English in 2003, attacks the issue of currency manipulation head-on, placing pressure on China to allow its currency to float or face steep tariffs. 

“Creating a level playing field in fair trade is imperative to the future of our domestic textile industry.  For years, China has flooded our markets with illegal transshipments and manipulated its currency to place unfair tariffs on American goods sold in China.  It is time for these policies to stop,” Hayes said.  “I am a strong supporter of the China Act of 2007 because it allows us to take the necessary steps to combat these illegal trade policies by levying our own tariffs when precise currency manipulation is determined.  American jobs are valuable.  It is time China and the U.S. engaged in fair trade with one another.”

Specifically, the measure imposes automatic tariffs if the Treasury Department finds China’s exchange rate policy conforms to the World Trade Organization (WTO) definition of currency manipulation, as described in the General Agreement on Tariffs and Trade (GATT) 1994 and the International Monetary Fund (IMF) agreements.  If manipulation is found, the Secretary is required to levy tariffs equal to the percentage of manipulation found.  This is in addition to any existing tariffs on Chinese imports.

"Our workers from Western New York to Pennsylvania to North Carolina can compete and win with anyone in the world," stated Congressman Thomas M. Reynolds (R-NY26).  "But they can only compete if the playing field is level.  This bill seeks to put pressure on China to start playing by the rules or face serious consequences."

China’s refusal to fully value its currency at market value has long been viewed as a predatory trade practice that largely contributes to record U.S. trade deficits and job losses in America’s domestic manufacturing sector.  Last month, the Treasury Department released a report to Congress that once again failed to cite China as a currency manipulator.   The lack of action by the Administration prompted the lawmakers to reintroduce the measure during the 110th Congress.

A Summary Follows:

The Currency Harmonization Initiative through Neutralizing Action (CHINA) Act of 2007

Introduced by Representatives English, Hayes and Reynolds

Summary of Provisions:

This bill requires the Secretary of the Treasury, within 60 days of enactment, to analyze and report to Congress whether China is manipulating its currency within the meaning of Article XV of GATT 1994.

• 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 International Monetary Fund.  The International Monetary Fund 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 affirmatively, the report to Congress will indicate the degree of manipulation against the dollar. 

Within 30 days after reporting manipulation to Congress, the Secretary is required to levy tariffs equal to the percentage of manipulation found.  This is in addition to any existing tariffs on Chinese imports.

The Secretary is directed to report to Congress thereafter on a yearly basis from date of enactment.

The CHINA Act also urges the administration to clarify and improve, without weakening or impairing existing trade remedy laws, World Trade Organization rules with regard to currency manipulation to reflect modern day monetary policy not envisioned at the time current rules were adopted in 1947.

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