A number of our legislators have recently accused China of deliberately undervaluing its currency to reduce the price of its products and give its companies an unfair trade advantage. According to many estimates, Chinese government intervention keeps the yuan about 20% below its free market value against the dollar. Lawmakers believe these manipulations are subsidies that should be retaliated against. China claims that it manages its currency to ensure domestic stability and not to cheat its trading partners. Chinaâ€™s membership in the International Monetary Fund (IMF) requires it to â€œavoid manipulating exchange rates … in order to prevent effective balance of payments adjustment or to gain an unfair competitive advantage over other members.â€ However, there is no venue in which this claim can be effectively challenged because the IMF agreement is basically unenforceable. Afraid of sparking a trade war, our Treasury Department has declined to cite China for its currency manipulations. Retaliation opponents claim China has made improvements regarding currency issues in recent years and that many other countries are worse offenders. They claim Singapore, Taiwan, Switzerland and Japan now manipulate the value of their currencies for gains in international trade to a worse extent than China. They also say that the exchange rate is not the main impediment to American companies trying to sell more products to china.
H.R.1276 – Currency Reform for Fair Trade Act
I oppose reforming current currency manipulation policy and wish to defeat H.R.1276
I support investigating whether currency manipulation is a subsidy and subject to retaliation by determining if the currency of a foreign country is fundamentally undervalued if for an 18-month period; the government of the country engages in protracted, large-scale intervention in one or more foreign exchange markets; the country’s real effective exchange rate is undervalued by at least 5%; the country’s government has foreign asset reserves exceeding the amount necessary to repay all its debt obligations falling due within the coming 12 months, wish to pass H.R.1276