Home Bill Bolling S01E02: H.R. 2378, Currency Reform for Fair Trade Act

S01E02: H.R. 2378, Currency Reform for Fair Trade Act

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cross-posted from Main Street Insider

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

Introduced 5/13/2009

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.

Further links

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.