House Passes China Currency Bill
The U.S. House of Representatives last week passed H.R. 2378, the Currency Reform for Fair Trade
Act, by a vote of 348 to 79. The bill received strong bipartisan support from 249 Democrats and 99
Republicans, and now must be taken up by the Senate for final passage.
H.R. 2378 addresses currency undervaluation by foreign countries as a factor in foreign trade, and particularly China's undervaluation of its currency and the impact of that valuation on U.S.-China trade. While it is claimed to be consistent with U.S. obligations under World Trade Organization (WTO) rules, it allows the Department of Commerce under certain circumstances to impose countervailing duties on foreign exports to the United States when those exports benefit from currency manipulation by the foreign government in question (See " Ways And Means Passes China Currency Reform Bill, September 29, 2010).
Calling the vote "a victory for U.S. jobs, investment, and growth," Fair Currency Coalition (FCC) Executive Director Charles Blum expressed gratitude to Reps. Tim Ryan, D-Ohio, and Tim Murphy, R-Pa., lead sponsors of the bill, saying, "These men are fighters and have struck a bipartisan blow on behalf of American business and workers against unfair trade and offshoring."
National Council of Textile Organizations (NCTO) President Cass Johnson also hailed the House action, saying passage of the bill "sends an unmistakable message that our country will no longer follow the road of appeasement and economic decline but will instead stand up for its workers, its manufacturers, and its economic future when countries such as China refuse to play fairly. This bill creates jobs and helps restore our manufacturing base while being deficit neutral. It is a win-win for the American people."
The National Retail Federation (NRF) opposes the bill, stating, among other concerns, that it would not comply with WTO rules because the WTO does not list currency exchange practices among the factors that can be considered in countervailing duty cases. Rather than legislation, the federation supports the use of "multilateral and diplomatic channels" to effect currency reform.
"While we agree that the Chinese currency needs to move toward a market-determined exchange rate, H.R. 2378 would be ineffective in addressing the currency issue and would create significant costs for U.S. companies and workers in retail and other industries," NRF Senior Vice President for Government Relations Steve Pfister wrote in a letter to House members. "This bill cannot provide effective leverage over China to resolve the currency issue or have any positive impact on either the trade deficit or U.S. jobs."
October 5, 2010