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Camp Statement – H.R. 2378, As Amended: “The Currency Reform for Fair Trade Act”

September 29, 2010

Let me start by saying that it is truly disappointing that this is the only trade bill in the past two years that has been marked up by the Ways and Means Committee.  I find it unacceptable that this is the sum total of our trade agenda.

While this legislation addresses an important issue, it will not address many more pressing trade concerns with China and will not advance the goal of doubling exports in five years.  To achieve those goals, we must move expeditiously on the pending free trade agreements, work harder to open new markets to our exports, and address broader economic issues all over the world and with China. 

We have held four separate hearings on China this year alone.  At each, we heard from witnesses – including Treasury Secretary Geithner – who stressed that China’s currency policy is only one element in our highly complicated trading relationship. 

It’s not that China’s currency policy is not a problem or priority – it’s just that there are far larger issues with regard to China and our trade imbalance.  Issues like intellectual property rights, indigenous innovation, export restraints on rare earth minerals and other items, and a host of other non-tariff barriers are wreaking havoc on American employers, their workers, and our economy. 

Despite my disappointment about the lack of a broader trade agenda and the lack of action on these other concerns with respect to China, it would be an enormous mistake to give up completely on addressing China’s currency policy.  We all agree that China’s currency is fundamentally misaligned and that China must take prompt action to allow market forces to determine the value of its currency. 

At the same time, it is important that any legislation be consistent with our international obligations and be effective.  Any legislation that could potentially expose the United States to WTO-sanctioned retaliation would undoubtedly do more harm than good and would undermine our efforts to get China to comply with its own obligations.

At our hearings over the past few weeks, a number of witnesses and Republican Members raised serious concerns about the WTO-consistency of the original version of H.R. 2378.  As a result of these concerns, Chairman Levin completely rewrote the bill.  

The version before us today has little in common with the original, which, on its face, violated our WTO obligations.  It addresses many of the criticisms raised by witnesses and Republican Members, and I appreciate that the Chairman has taken these concerns into account. 

Unlike the original version, this bill does not mandate that the Commerce Department automatically adjust antidumping and countervailing duty calculations to account for China’s currency policy.  This version allows Commerce to consider many factors in determining whether or not China’s currency policy satisfies the technical definition of an export subsidy, as it does today, and does not prejudge an outcome.

While I remain deeply concerned about using the countervailing duty law to address China’s currency policy, I believe the bill before us today does not, on its face, violate our WTO obligations. 

I will vote for this bill because it sends a clear signal to China that Congress’s patience is running out but does not give China an excuse to retaliate against U.S. companies and their workers.  While we cannot pass legislation that likely violates our WTO commitments and would result in WTO-sanctioned retaliation, we cannot, at the same time, allow ourselves to be afraid of China’s reaction to a WTO-consistent measure. 

If China retaliates against this bill at this stage, I fully expect that USTR – and the Administration as a whole – will act swiftly and aggressively to pursue every option available, including through action at the WTO.  China’s posturing and bad behavior cannot dictate our trade policy.

This legislation also sends an important signal to the Administration:  it is time to produce results.  The Administration must step up its bilateral and multilateral efforts and set a clear timeline for action.  The Administration should work to ensure that the issue of global imbalances – which naturally includes China’s currency policy – is prominently on the agenda at the November G-20 meetings in Seoul.  We should also reengage in bilateral investment treaty negotiations.

As I noted at our mark-up:  The fact that the Administration has not moved aggressively on a multilateral basis has forced us to this point.  The legislation we are considering today is better than the original, but still won’t resolve our trade imbalance with China.