Treasury Delays its Currency Report Until After Meetings with China, G-20
On April 3, 2010, the Treasury Department announced that it would delay publication of its report to Congress on the international economic and exchange rate policies of major U.S. trading partners (such as China) which was due on April 15, 2010, as there are a series of high-level meetings over the next three months (such as G-20 meetings and the Strategic and Economic Dialogue with China in May) that that could advance U.S. interests.
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According to the Treasury Department, China's strong fiscal and monetary response to the crisis enabled it to achieve economic growth of nearly 9 percent in 2009, contributing to global recovery. Now, however, China's continued maintenance of a currency peg has required increasingly large volumes of currency intervention. Additionally, China's inflexible exchange rate has made it difficult for other emerging market economies to let their currencies appreciate. A move by China to a more market-oriented exchange rate will make an essential contribution to global rebalancing.
Congress Responds to Delay, Warns of Further Action
In response to the Treasury Department's delay, various members of the House and Senate issued statement and comments, including:
House Ways and Means Committee Chairman Levin (D) warned that if the delay does not result in China's making significant changes, the Administration and Congress will have no choice but to take appropriate action.
Senate Finance Committee Ranking Member Grassley (R) criticized Treasury's decision and renewed his call for the Administration to prepare a World Trade Organization case against China.
Senate Currency Manipulation Bill Was Introduced in March
On March 16, 2010, a bipartisan group of Senators introduced legislation, the Currency Exchange Rate Oversight Reform Act, to address currency misalignments that affect U.S. trade. The goal of the legislation is to penalize countries, such as China, that undervalue their currency to artificially discount their foreign products, which provides a trade advantage over U.S. products. The legislation is a combination of bills introduced in two previous congresses.
15 Senators Want Currency Manipulation to be Considered in CV Investigations
On February 25, 2010, a bipartisan group of 15 Senators, led by Senator Schumer (D), sent a letter to Commerce Secretary Locke expressing their serious concern that the Commerce Department has failed to properly consider allegations that China's manipulation of its currency is a countervailable subsidy.
According to the Senators, U.S. manufacturers have filed at least 12 separate allegations - most recently on January 13, 2010 in the Coated Paper investigation - that the Chinese government is actively engaged in keeping the value of its currency artificially low to promote the growth of export-oriented industries. The Senators urged Commerce to properly consider the currency manipulation allegation in the coated paper investigation and the information provided by petitioners in determining whether to investigate China's actions.
(See today's ITT, 10040560, for BP summary on Congressional response to Treasury's delay.
See ITT's Online Archives or 03/17/10 news, 10031712, for BP summary of the introduction of the Currency Exchange Rate Oversight Reform Act.
See ITT's Online Archives or 03/01/10 news, 10030120, for BP summary of 15 Senator's letter to Commerce on currency manipulation.)
Treasury press release TG-627 (dated 04/03/10) available at http://www.ustreas.gov/press/releases/tg627.htm