WASHINGTON - Ways and Means Committee Ranking Member Sander Levin (D-MI) and Trade Subcommittee Ranking Member Jim McDermott (D-WA) issued the following statements today ahead of tomorrow’s one-year anniversary of China’s announcement that it would allow greater exchange rate flexibility. The anniversary comes as House Democrats prepare to force a vote on the Currency Reform for Fair Trade Act of 2011 :
“Recent studies indicate China’s currency is even more undervalued today than it was a year ago, when China promised us progress," said Ways and Means Ranking Member Sander M. Levin. “Eight years of quiet diplomacy have yielded meager results. It is time for Congress to provide relief to U.S. companies and workers injured by China’s practices, and to provide U.S. officials greater leverage in their negotiations with China. The same legislation that passed the House last fall by a vote of 348 to 79, with majorities of both parties voting in support, should be taken to the House floor without further delay."
“American workers deserve immediate action on currency legislation. It is abundantly clear that we need to take a more assertive approach on this issue - and that our unsustainable global trade imbalance will only get worse if China continues to manipulate its currency," said Trade Subcommittee Ranking Member Jim McDermott.
China has allowed only a modest appreciation of its currency over the past year (roughly 5%) - and about half of that appreciation occurred in the six weeks last Fall when the House of Representatives was considering and acting upon the currency bill that passed the House.
According to a recent estimate from economists at the Peterson Institute for International Economics, when all factors are taken into consideration, China’s currency is even more undervalued today than it was a year ago (28.5% against the dollar today versus 24.2% against the dollar last year). And, in the first quarter of this year, China accumulated an additional $197 billion in foreign exchange reserves in its effort to prevent its currency from appreciating.
Secretary Geithner recently stated that China’s currency remains “substantially undervalued" and that “progress thus far is insufficient." But he again decided against designating China as a currency manipulator. Treasury has expressed concern over China’s exchange rate policy for at least eight years, in early 2003.
H.R. 639 (the Currency Reform for Fair Trade Act) will help American businesses compete on a more level playing field, by allowing for the imposition of “countervailing" import duties to offset the undervalued currency where imports have caused “material injury" to a U.S. industry. Last year, the House passed a virtually identical bill that passed the House by a vote of 348 to 79, with a majority of both parties voting in support. H.R. 639 currently has 156 co-sponsors.
