When we Make It In America, we create jobs to lead the world economy. Our national manufacturing strategy creates the high-skill, high-wage jobs of the future--promoting American competitiveness, innovation, and exports.
On September 29th, the House passed the Currency Reform for Fair Trade Act (H.R. 2378) a key part of our 'Make It In America' initiative to increase American manufacturing and create new American jobs. The bipartisan bill gives the Administration effective tools to address the unfair trade practice of currency manipulation by foreign countries, including China. The bill makes clear that additional tariffs can be imposed to offset the effects of a “fundamentally undervalued” currency under U.S. trade remedy laws (known as the countervailing duty laws). The bill contains two key provisions:
- Reverses a current Commerce Department practice that has precluded it from treating foreign government currency practices as an export subsidy
- Directs Commerce on how to measure the subsidy provided to foreign producers through currency undervaluation
Members of Congress, U.S. businesses, and workers are concerned that the Chinese government has intervened in world markets, causing its currency to be undervalued by as much as 25 to 40 percent. This unfair trade practice translates into a significant subsidy, artificially making Chinese imports into the United States much cheaper and U.S. exports to China much more expensive, jeopardizing efforts to create and preserve manufacturing jobs in America.
China's currency manipulation has reduced American exports, caused the loss of U.S. manufacturing jobs, and significantly contributed to our large trade deficit with China. If China allowed its currency to respond to market forces, it could create a million U.S. manufacturing jobs and cut our trade deficit with China by $100 billion a year, with no cost to the U.S. treasury.
For years, the Bush Administration, the Obama Administration, and Members of Congress have tried to persuade the Chinese government to allow its currency to respond to market forces. No significant progress has been made. This legislation will give the Administration leverage in negotiations with the Chinese government - so U.S. businesses and workers have a more level playing field in world trade.
The legislation is World Trade Organization consistent; remedies are limited to countervailing duties and there is no requirement of a finding of currency undervaluation as an export subsidy.
The bill is supported by the Fair Currency Coalition (a coalition of industry, agriculture, and labor), AFL-CIO, Coalition of Agricultural Producers (including American Corn Growers & National Farmers Union), United Auto Workers, U.S. Business and Industry Council, United Steel Workers, American Iron & Steel Institute, American Manufacturing Trade Action Coalition, Alliance for American Manufacturing, and National Council of Textile Organizations.