USCBC Speaks Out As Currency Bill Resurfaces

Stephanie Henry

Critics of China’s currency policies introduced legislation today in the House and Senate that would allow the imposition of tariffs on imports from countries considered to be currency manipulators. The House bill mirrors currency legislation that passed the House in 2010. The latest Senate bill takes a narrower approach, but still raises similar issues that the Senate’s 2011 currency bill created in regards to the United States’ World Trade Organization (WTO) compliance. The US-China Business Council (USCBC) anticipated the bills’ introduction and has been conducting outreach to congressional offices to oppose the measures. USCBC is expanding its outreach to members of the Senate who opposed the bill in 2011, and invites interested USCBC members to join upcoming meetings.  
While USCBC believes that China’s exchange rate should better reflect market influences from trade flows, bilateral and multilateral negotiation has proven to be successful in moving toward that goal. Over the past ten years, China’s Renminbi (RMB) has appreciated more than 35 percent against the US dollar, largely a result of steady engagement led by the Treasury Department. In fact, in its most recent review of China’s economy, the International Monetary Fund estimated that the RMB is only moderately undervalued (Article IV consultation report, p. 15, July 2014).
The legislation introduced today would require the US Department of Commerce (DOC) to treat currency manipulation by trading partners as a countervailable subsidy. That would allow the United States to levy tariffs in trade remedies cases on imported products from countries deemed to be currency manipulators. Though the bills were reportedly a “narrower” attempt to address currency manipulation, they continue to raise significant problems and concerns.
Trade lawyers generally hold that treating currency as a countervailable subsidy is likely incompliant with the United States’ international commitments. The legislation would require DOC to estimate the “true” exchange rate, an exercise which would be highly subjective and potentially politicized. And, the ultimate effect of the tariffs would be to arbitrarily raise prices for the American consumer.   
In response to the bills’ introduction, USCBC President John Frisbie said: “The US-China Business Council has for many years advocated that China’s exchange rate should better reflect market influences from trade flows. Over the past ten years, we have seen how continued engagement from two administrations – Democrat and Republican – has led to China’s currency appreciating more than 35 percent against the US dollar. This bipartisan approach has succeeded beyond even the 27.5% appreciation/tariff demanded in the original currency bills introduced by members of Congress in 2005….USCBC encourages members of Congress to once again reject this currency legislation.”
USCBC is coordinating meetings with the relevant committees that will be the first to review and vote on the currency legislation: the Senate Finance Committee and House Ways and Means Committee. USCBC is also organizing broader outreach to Senators who have opposed currency legislation in the past, and will be contacting USCBC members who have shown interest in joining USCBC at those meetings. If you or your team are interested in participating at these meetings and haven’t already alerted USCBC of your interest, please contact USCBC Vice President Erin Ennis ([email protected]).