In an effort to reduce the U.S.’s huge trade deficit with China, a bipartisan group of legislators today reintroduced the Currency Reform for Fair Trade Act.
The bill would give the U.S. Department of Commerce authority to apply countervailing import duties against imported goods if they are found to benefit from foreign government currency practices that act as an illegal export subsidy. Manufacturers would be able to seek remedies under current trade laws when injured by a foreign country’s currency manipulation.
The bill was introduced by U.S. Representatives Sander Levin, D-Mich., Tim Murphy, R-Pa., Tim Ryan, D-Ohio, and Mo Brooks, R-Ala. The same bill had 234 sponsors in the 112thCongress and is virtually identical to a bill that passed the House by a 348 to 79 vote in the 111thCongress.
Scott Paul, president of the Alliance for American Manufacturing and a critic of U.S. trade practices, called the legislation “a common-sense bill” and said congressional action was needed because “It’s clear the administration is not going to do enough to really press China on currency.”
“The U.S. trade deficit with China was $33.4 billion in 2012 and was caused, in substantial part, by that country’s persistent currency undervaluation,” charged Michael Stumo, CEO of the Coalition for a Prosperous America. “Otherwise competitive companies have ceased operations, moved offshore and/or laid off workers because of this foreign government currency market rigging.”
“Currency manipulation to gain an unfair competitive advantage is among the most destructive trade-distorting practices used today,” said Thomas J. Gibson, president and CEO of the American Iron and Steel Institute, in supporting the bill. “While China has been the largest offender, in today’s weak global economy an increasing number of governments are manipulating their currencies to insulate their domestic producers. This is devastating to U.S. domestic manufacturers especially the steel industry and is contributing to the nation’s inability to fully recover from the recession.”
Gibson charged that China continues to provide “massive subsidies to its steel industry.” He said its annual steel production capacity of 970 million tons far exceeds its home market demand. This allows it to provide cheap exports to foreign markets such as the U.S.