US Takes On China Currency Policy Issue

U.S. Takes On ChinaCurrency Policy Issue
Legislation has been introduced in both houses of the U.S. Congress to address the effects of China’s currency policy on the health of the U.S. manufacturing sector.In the Senate, a bipartisan bill introduced by Senators Elizabeth Dole, Lindsey Graham and Charles Schumer directs additional tariffs of 27.5 percent to be imposed on U.S. imports of Chinese goods if China refuses to float its currency within 180 days. The tariff rate is reportedly equal to the estimated average undervaluation of the Chinese yuan vis-à-vis the U.S. dollar.In the House of Representatives, Representatives Cass Ballenger, Phil English and Mark Green also introduced legislation to nullify the effects of China’s currency manipulation. The Currency Harmonization Initiative through Neutralizing Action (CHINA) Act of 2003 would require the Secretary of the Treasury to determine whether China is manipulating its currency to gain a trade advantage and, if such a finding is made, to levy tariffs equal to the percentage of manipulation in addition to tariffs currently in place. The bill also calls on the Bush administration to pursue remedies through the World Trade Organization, the International Monetary Fund and other means.
Winter 2003