Currency Measures Still in Play on Capitol Hill

Stephanie Henry

After the introduction of currency legislation in the House and Senate last week, it appears unlikely that the House will take up a standalone bill, though the issue may be included in Trade Promotion Authority (TPA) sought by President Obama to finalize Trans-Pacific Partnership (TPP) negotiations. Rep. Paul Ryan (R-WI), Chairman of the House Ways and Means Committee, has been vocal in opposing the bill, calling it a “counterproductive tactic [that] would trigger higher tariffs on any country believed to be manipulating its currency.” Ryan’s committee would be the first to consider the bill in the House. Under House rules, his opposition means the bill is unlikely to proceed beyond the committee.

In contrast, the Senate seems to be on a path toward taking up the currency bill. Though Senate Finance Committee Chairman Orrin Hatch (R-UT) voted against currency legislation in 2011, when it was last taken up by the Senate, the Senate’s procedures could provide opportunities for senators to offer such a measure as an amendment to TPA. It’s also possible that Senate leadership could decide that a vote on a separate currency measure is necessary to secure enough votes to pass TPA.

Senate Finance Minority Leader Ron Wyden (D-OR) supported currency legislation in 2011, and has called for new currency provisions in the TPP and stronger negotiating objectives in TPA. Neither TPP nor TPA would impact China directly; however, the standalone currency legislation introduced last week would potentially affect trade with China. That legislation would allow the Department of Commerce to impose trade remedies in response to currency manipulation by US trading partners.

The Obama administration is opposed to currency measures—both legislation to impose trade remedies and as a negotiating objective in TPA. Treasury Undersecretary for International Affairs Nathan Sheets said today that the administration is making “significant progress” on currency issues through diplomatic channels, and should continue to pursue that strategy. Treasury Secretary Jack Lew has emphasized that the renminbi must appreciate further, but has said that legislative efforts to address exchange rates aren’t the right solution. In a hearing before the Senate Finance Committee in February, Lew said, “I would be concerned that the effectiveness we have dealing through the existing channels could be diminished in some ways if some [legislative] approaches were taken.”   

USCBC has consistently opposed currency legislation when it has been introduced. The latest legislation calls for the application of countervailing duties to try to influence trading partners’ exchange rate policies. Application of trade remedies for these types of cases would violate World Trade Organization rules and undermine the Treasury Department’s successful engagement with China on this issue. Such engagement has helped realize a 35 percent appreciation in the renminbi over the past several years. USCBC is continuing its outreach to the Senate Finance Committee and senators who have opposed the bill in the past.