Sen. Charles Schumer is again taking the lead in introducing the Currency Reform for Fair Trade Act which would allow for under-valued currencies to be considered countervailable subsidies. The bill passed in the House of Representatives last year, but died in the Senate before it could come up for a vote. AWPA was included as one of the supporting organizations of this bill in the Senator's “Dear Colleague” letter that was sent to all 100 Senators. Joining Schumer as lead sponsors were Sens. Lindsey Graham (R-SC), Debbie Stabenow (D-MI), Jeff Sessions (R-AL), Bob Casey (D-PA) and Richard Burr (R-NC). Several others have signed on as co-sponsors including Sheldon Whitehouse (D-RI), Jack Reed (D-RI), Richard Blumenthal (D-CT), Kent Conrad (D-ND), Susan Collins (R-ME), Ben Cardin (D-MD), Carl Levin (D-MI) and Kirsten Gillibrand (D-NY). This is virtually the same bill introduced during the last Congress, with the addition of a technical fix to ensure that the subsidy benefit calculation (which is used to determine the amount of the countervailing duties collected on subsidized imports) best reflects the full amount of undervaluation. In addition, a provision was added to clarify that the new subsidy/countervailing duty provision apply to ongoing and new CVD investigations and reviews. Meanwhile, Sens. Olympia J. Snowe (R-ME) and Jay Rockefeller (D-WV) introduced their own currency bill that would hold U.S. trading partners accountable if they deliberately suppress the value of their currency to gain an unfair trade advantage. The Currency Exchange Rate Transparency Act would require that, before Congress approves any bill implementing a free trade agreement or extending permanent normal trade relations to another country, the President must first certify to Congress that the government of the potential trading partner has not, in the ten years preceding the certification, manipulated its currency for the purposes of gaining an unfair advantage in international trade. To enforce this requirement, the bill states that the Senate shall cease consideration of the trade agreement if a point of order is made by any Senator against the bill because it is not accompanied by the certification from the President. This bill differs from previous currency bills in that it does not seek to impose new duties on imports in order to correct the effects of the undervalued currency. “American job creators cannot afford to enter into trade agreements with known violators of international trade laws,” said Sen. Snowe. “Manufacturers and workers in trade-sensitive industries, including Maine's paper production industry, have already been harmed by China's enduring mercantilist trade practices. This common-sense legislation will protect American jobs and competitiveness by ensuring that special trade privileges are not afforded to nations who engage in currency manipulation. It will also send a clear message to our potential free trade agreement partners that Congress and the President have a zero-tolerance policy when it comes to the unfair practice of currency manipulation.” “Before we sign any trade agreements with other countries, we need to make sure those countries are not manipulating their currencies,” said Sen. Rockefeller. “American workers can compete with anyone in the world as long as they're on a level playing field. Unfortunately, too many other countries engage in unfair trade practices and exploit loopholes in the law to boost their businesses and exports. Since 2001, West Virginia has lost almost 24,000 manufacturing jobs, in many cases to companies overseas. This bill will help make sure all our trading partners play a fair game and allow American workers to compete.” As U.S. manufacturers know well, China's exchange rate intervention makes Chinese-produced goods cheaper when compared to similar products made in America thus driving up our trade deficit with China and putting American workers at a severe disadvantage. Unfortunately, as China continues to undervalue its currency to undercut market competition, it also incentivizes other nations to follow its model as a way for their exporters to stay competitive with low-priced Chinese products. At present, Congress and the Administration are debating the merits of several pending free trade agreements and the U.S. Trade Representative is in the process of negotiating a new agreement with a group of countries in the Trans-Pacific region. Interference in currency markets creates an uneven global playing field, distorts global trade, and leads to instability at a time when the world can ill afford it. Therefore, the Currency Exchange Rate Transparency Act is intended to send the message that a key precondition to entering into any trade agreement with the U.S. should be the clear absence of any governmental currency intervention or manipulation. AWPA
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