Panel 1 Of A Hearing Of The Trade Subcommittee Of The House Ways And Means Committee: Trade With China, Currency, Food Safety
REP. RYAN: Mr. Chairman and Ranking Member Herger, thank you very much -- Mr. Chairman, to you especially for just being an absolute bulldog on this issue. As you have known, I've spent a significant amount of time and staff resources since I got to Congress to try to educate members and the public on this issue and craft legislation that many believe will go a long way to leveling the playing field with our relationship with China.
Let me begin by saying that I believe that free and fair trade relationships are critical to our nation in today's global economy. The United States must continue to develop strong trade relationships to ensure that our industries can compete in the global marketplace and provide jobs and economic growth for our local communities. However, U.S. trade law must provide a level playing field, as Mr. Davis articulated quite well earlier, and must not unfairly cripple U.S. industries at the hands of foreign governments by their illegal practices.
Currency exchange rates are an essential element of the global trade process, and significantly misaligned or artificially undervalued currencies have a devastating impact on domestic manufacturing and create an unacceptable trade relationship. There is ample evidence from both conservative and liberal think tanks and scholars that various foreign governments undertake practices that result in their currencies' artificial undervaluation relative to the U.S. dollar. And the United States cannot allow our trading partners to continue this illegal practice without providing remedies for injured industries.
As you know, and as Representative Hunter stated earlier, we recently introduced the Currency Reform for Fair Trade Act of 2007. This bill is an updated version of the Fair Currency Act of 2007 which had 112 bipartisan co-sponsors. Mr. Hunter and I believe this new bill, H.R. 2942, is a stronger piece of legislation that provides greater necessary relief for U.S. industries being harmed by unfair currency practices. As such, we believe this legislation will appeal to an even greater number of members. And let me quickly review some of the features of our bill.
The bill applies countervailing duty law to currency undervaluation and defines fundamental and actionable misalignment as an undervaluation that exceeds 5 percent on an average for an 18-month period prior to the date of determination. This bill continues to require the use of public data to compute the extent of currency undervaluation, but adds a specific approach for determining the level of undervaluation based on the simple average of three standard economic methodologies.
This bill also continues the application of the anti-dumping law to currency undervaluation by amending the current anti-dumping law, requiring the Commerce Department to adjust the price of an import from a country whose currency is found to be fundamentally misaligned, in order to achieve a fair comparison. This bill also applies countervailing duty law to non-market-economy countries -- Mr. Davis also mentioned that -- while describing methodologies to construct a non-market economy price. This bill holds countries accountable if they maintain a misaligned currency by requiring certain monetary and trade steps by the secretary of Treasury, including commencement of dispute settlement at the WTO and consideration of remedial intervention when a country fails to eliminate its currency misalignment.
Finally, this bill creates an advisory committee on international exchange rate policy to advise the secretary of Treasury and the president on international exchange rates and financial policies. This panel is to be made up of non-government employees appointed by the House, Senate, and president.
It is essential, Mr. Chairman, that this Congress pass strong legislation to ensure action is taken on the part of U.S. industries and that each of these elements of our legislation is critical to ensuring a fair trade environment. As you know, the Senate has also been recently engaged in the issue of currency misalignment. Yesterday S. 1677 was marked up and passed out of the Senate Banking Committee, and last week S. 1607 was marked up and passed out of the Senate Finance Committee. I will take just a moment to point out some of the key differences between our bill and S. 1607, the Baucus- Grassley-Schumer-Graham bill.
First of all, while the Senate bill 1607 addresses anti-dumping laws in relation to currency, it does not allow for the application of countervailing duty laws to undervalued currency. This will not provide sufficient relief for our industries.
Second, this bill provides far too much flexibility to the Treasury Department in determining when a petition can be filed under the anti-dumping statute at the Commerce Department and the U.S. International Trade Commission, only allowing petitioners to seek anti-dumping relief after Treasury has made a determination of misalignment and designated the currency for priority action. This approach makes Treasury a strong gatekeeper and provides far too great a barrier to U.S. industries in need of relief. Under our bill, U.S. industries can directly petition the Commerce Department and the U.S. International Trade Commission, as they can under existing trade law, without waiting for Treasury determinations. Blocking this ability to directly petition their government on currency matters is a step backwards in the process, and is not acceptable.
Finally, the Senate bill is too vague in its definition of fundamental misalignment. As I previously stated, our bill requires the use of standard economic methodologies to determine whether a specific level of misalignment has occurred for a specific period of time. The Senate bill 1607 defines misalignment as "significant and sustained," without providing any guidance as to what constitutes significant or sustained. Again, this provides far too much leeway and will lead to continued inaction. We don't have the time to get bogged down with weak legislation. Small- and medium-sized American manufacturers need our help now. While I applaud the efforts of this committee and of the Senate to address the critical issue of currency misalignment, I believe that any action taken must be strong and end this devastating practice that threatens to destroy our industrial base. Passage of a weak bill will only lead to many more years of inaction by the administration, loss of jobs, loss of critical U.S. manufacturing capability, and the continued demise of our defense industrial base.
Mr. Chairman, I can't thank you enough for having this hearing and the support. Obviously we can see not only of the Ryan-Hunter Bill which Mr. Hunter calls the Hunter-Ryan Bill in South Carolina and Nevada, New Hampshire and Iowa. (Laughter.) But this is something that has bipartisan support, people who support trade agreements, people who do not support trade agreements, Democrats, Republicans, from all over the country and I appreciate you giving us such an opportunity to look at this and look forward to working with you and the committee in the future. Thank you.