Bayh, Bunning, Stabenow Introduce Legislation to End Currency Manipulation by China

Press Release

Bayh, Bunning, Stabenow Introduce Legislation to End Currency Manipulation by China

U.S. Senators Evan Bayh, Jim Bunning, and Debbie Stabenow today introduced legislation, the China Currency Manipulation Act of 2008, that will put a stop to currency manipulation by China that is distorting international trade and creating a threat to the global economy. All three senators expect to work together in the near future to strengthen the trade remedies in Senate currency legislation reported by the Senate Finance and Banking Committees last summer.

"American companies and workers are put at a major competitive disadvantage when China engages in massive intervention to lower the value of its currency and lower the cost of Chinese goods," Bayh said. "This legislation will force the Treasury Department to stop turning a blind eye to Chinese attempts to gain an unfair trade advantage by undervaluing their currency."

A 1988 law requires the Treasury Department to monitor the exchange rate policies of foreign nations, including China, and to report to Congress when any country intervenes to gain an advantage in trade with the United States by artificially depreciating the value of its currency.

In the face of overwhelming evidence to the contrary, including a historic trade deficit, Treasury Secretary Henry Paulson maintains that China's actions are unrelated to the obvious trade advantage that it gains by undervaluing its currency. Chinese currency is currently undervalued by between 30 percent and 40 percent, according to trade economists who have testified before Congress. Last year, the United States trade deficit with China was a record $256 billion, the largest with any nation.

"I don't know why Secretary Paulson is ignoring the law," said Bunning. "Instead of traveling to Beijing to ‘kowtow' to the new Chinese leadership, Secretary Paulson should be working with the growing number of countries that recognize the China currency threat to the global economy. Instead of praising China for small changes in policy, Secretary Paulson should apply the 1988 law as Congress intended. "

"Currency manipulation is a clear-cut form of unfair trade that is costing us jobs," said Stabenow. "Our trade deficit with China continues to grow, hitting $256 billion last year, thanks in no small part to China's manipulation of their currency. The solution is simple - we must hold countries that cheat accountable. America can compete with anyone when the playing field is level, and this bill is a much needed step in the fight for fair trade."

The Bayh-Bunning-Stabenow bill that is supported by the China Currency Coalition would require the Secretary of the Treasury to make a finding under the 1988 Act that China is manipulating its currency to gain an unfair trade advantage. It would require the Secretary of the Treasury to establish a plan of action within 30 days on its enactment with specific time frames and benchmarks to remedy China's currency manipulation and to submit a report to Congress describing the plan. The legislation would also require the Secretary to seek consultations in the International Monetary Fund under Article IV of the IMF charter with respect to China. The provisions in the bill are similar to those outlined in the currency legislation that was approved by the Banking Committee last July.

Source