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CHINA CURRENCY COALITION
WASHINGTON, D.C.
chinacurrencycoalition.org

Contact:           Meg Mullery     202-342-8439
                        mmullery@kelleydrye.com

U.S. Coalition Expresses Appreciation for Introduction of
Legislation Addressing Currency Manipulation

(Washington, D.C.) (June 13, 2007) – A coalition of U.S. industrial, agricultural and labor organizations expressed appreciation for legislation announced in the Senate today that would address China’s policy of undervaluing its currency, according to spokesmen for the China Currency Coalition, but also expressed concern that the bill needs strengthening to provide effective, timely remedies.

“We deeply appreciate the hard work of Senators Baucus, Grassley, Schumer and Graham in crafting the Currency Exchange Rate Oversight Reform Act of 2007 that deals with a complex and difficult issue. We applaud their innovative thinking and their recognition that China’s currency manipulation is a trade issue as well as a monetary issue,” said coalition co-chair and AFL-CIO Secretary-Treasurer Richard L. Trumka. He further noted that Senators Dodd and Shelby intend to introduce legislation soon that would strengthen U.S. law regarding currency manipulation.

Coalition co-chair Doug Bartlett, Chairman of Bartlett Manufacturing Company, Inc., in Cary, Illinois, and newly-elected Chairman of the U.S. Business and Industry Council, stated that the coalition continues to support S. 796, introduced by Senators Stabenow, Bunning, Bayh and others, that recognizes that currency manipulation constitutes a government subsidy, allowing Chinese producers to price products unfairly low. “Our view,” said Bartlett, “is that currency manipulation violates both anti-dumping and subsidy provisions of U.S. law and World Trade Organization (WTO) rules.”

He expressed the coalition’s support for the provision in the Currency Exchange Rate Oversight Reform Act of 2007 that permits consideration of currency manipulation in anti-dumping cases that deal with price discrimination, which is illegal under U.S. law and WTO rules. The coalition also supports the legislative provisions that would establish timelines for decision-making and remove the requirement that foreign government “intent” must be found before action can be taken.

However, the coalition believes several important provisions of today’s legislation need to be strengthened to make the legislation effective, including:

  1. The Treasury Department would have a key role in the antidumping process in that it would have to determine what the fair currency exchange rate should be and assess whether a country is adopting policies to eliminate currency misalignment. Treasury has not shown a willingness to act aggressively on the China currency issue and Treasury officials insist new legislation is not needed. However, just today, Treasury once again failed to make a finding that China is manipulating its currency, despite overwhelming evidence to the contrary.

  2. The President would be permitted to waive a finding of currency manipulation for national security reasons or if he finds it is in the national economic interest not to act. This provides too much discretion, particularly given the history of inaction by this administration.

  3. The legislation does not recognize currency manipulation as a government subsidy. It is widely recognized that China’s undervalued currency is an “effective” subsidy as stated recently by Federal Reserve Chairman Ben Bernanke. The China Currency Coalition supports the Ryan/Hunter bill in the House of Representatives and the Bunning/Stabenow/Bayh bill in the Senate, which recognize that the Chinese government provides subsidies as a result of its manipulation of the currency.

  4. The processes set forth in the bill are too lengthy and uncertain to meet the urgent need to address the China currency problem in the short term.

According to coalition counsel David A. Hartquist, “We will study the details of the proposed legislation carefully and confer with the Senate sponsors as to how the proposed language can be strengthened. We are pleased that the Senate intends to hold hearings and mark-up this legislation soon, as the situation for American producers and workers becomes more urgent every day. The coalition looks forward to continuing our work with Members of the Senate and the House of Representatives on this critical legislation.”

Hartquist noted that China’s trade surplus with the U.S. continues to increase at record levels and its foreign exchange reserves now exceed $1.2 trillion. Also, the United States and China share the most imbalanced bilateral trade relationship in the history of the world. Last year, the U.S. trade deficit with China was $233 billion and China accounted for 43 percent of our non petroleum goods deficit.

The China Currency Coalition is an alliance of industry, agriculture, and worker organizations whose mission is to support U.S. manufacturing by seeking an end to Chinese currency undervaluation.

David A. Hartquist is a Partner at Kelley Drye Collier Shannon in Washington, D.C. and Chairman of the firm’s International Trade and Customs Practice Group.

For more information on the coalition, visit www.chinacurrencycoalition.org.