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Currency Reform Legislation Reintroduced in Congress

In February, Senators Sherrod Brown (D-OH), Olympia Snowe (R-ME), and Representatives Sander Levin (D-MI), Tim Murphy (R-PA), and Tim Ryan (D-OH) introduced the Currency Reform for Fair Trade Act. Including Congressmen Levin, Murphy, and Ryan, the House bill was introduced with 101 original sponsors (27 R, 74 D).

The companion bills would make prolonged currency undervaluation actionable under U.S. countervailing duty (CVD) law. Their text is virtually identical to H.R. 2378, the Currency Reform for Fair Trade Act of 2009, bipartisan legislation that was passed by the U.S. House of Representatives by 348 to 79 vote in the 111th Congress.

The American Foundry Society and North American Die Casting Industry have argued over the years that illegally undervalued foreign currencies like China’s renminbi (RMB) are unfair export subsidies and trade barriers that discourage new investment needed in America. The U.S. bilateral deficit with China for the second half of 2010 is on pace to be the largest ever recorded by the United States for a six-month period.

Since the end of last September when the U.S. House of Representatives passed its bipartisan currency bill, China’s foreign currency reserves have grown by an estimated $200 billion and now total a staggering $2.9 trillion by the most conservative measures. Moreover, in nominal terms, the RMB has barely increased in value compared to the dollar, rising by just 4 percent, since June 21, 2010.

Despite the continuous engagement and best good-faith efforts of the current and previous administrations, bilateral and multilateral diplomatic talks show no sign of resolving issue satisfactorily. Chinese President Hu Jintao ignored every entreaty to meaningfully address the issue during his January state visit to Washington. The position of his government was no change from years of stonewalling in talks at both the G-20 and the bilateral U.S.-China Strategic and Economic Dialogue.

A copy of the Currency Reform for Fair Trade Act and list of cosponsors can be viewed at http://thomas.loc.gov/.

For more information, contact Stephanie Salmon, Metalcasters Alliance for Government Affairs Washington Office, 202/842-4864 or ssalmon@afsinc.org.