To require the Secretary of the Treasury to analyze and report on the exchange rate policies of the People's Republic of China, and to require that additional tariffs be imposed on products of that country on the basis of the rate of manipulation by that country of the rate of exchange between the currency of that country and the United States dollar.

Summary: Currency Harmonization Initiative through Neutralizing Action Act of 2003 - Directs the Secretary of the Treasury to analyze annually the exchange rate policies of the People's Republic of China, and to impose additional tariffs, if necessary, to equalize any currency manipulations.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Currency Harmonization Initiative 
through Neutralizing Action Act of 2003''.

SEC. 2. FINDINGS.

    (a) Findings.--The Congress finds as follows:
            (1) The benefit of trade concessions can be adversely 
        affected by misalignments in currency.
            (2) Misalignments in currency caused by government policies 
        intended to maintain an unfair trade advantage nullify and 
        impair trade concessions.
            (3) Under article XV of the GATT 1994, a country is 
        considered to be manipulating its currency to obtain an unfair 
        trade advantage if--
                    (A) its currency manipulation has a subsidy-like 
                effect;
                    (B) its currency manipulation constitutes a 
                nullification and impairment of the benefits of the 
                GATT 1994; or
                    (C) its currency manipulation results in a 
                contravention of the intention of the GATT 1994.
            (4) The International Monetary Fund also prohibits the use 
        of currency manipulation as a method of gaining unfair trade 
        advantage. The International Monetary Fund defines such 
        manipulation as large-scale and protracted intervention in one 
        direction to gain an unfair trade advantage.
            (5) Sections 301 through 309 of the Trade Act of 1974 
        contain the authority under United States law to take 
        retaliatory action, including import restrictions, to enforce 
        the rights of the United States against any unjustifiable, 
        unreasonable, or discriminatory practice or policy of a country 
        that burdens or restricts United States commerce.
            (6) In 2002, the United States trade deficit with the 
        People's Republic of China exceeded $103,000,000,000, the 
        largest bilateral trade deficit in the world. Based on the 
        first four months of 2003, the United States trade deficit with 
        the People's Republic of China is estimated to reach more than 
        $120,000,000,000 in 2003.
            (7) United States imports from the People's Republic of 
        China have been growing at more than twice the rate of United 
        States exports to that country.
            (8) The People's Republic of China is accumulating foreign 
        currency reserves, mostly United States dollars, at a rate of 
        more than $6,000,000,000 per month; this intervention has kept 
        the Chinese renminbi (RMB) from appreciating despite large 
        trade surpluses and investment flows. China's total foreign 
        currency reserves currently stand at almost $300,000,000,000.
            (9) The People's Republic of China has kept its currency 
        pegged at approximately 8.3 RMB to the dollar since 1994.
            (10) The large and growing trade surplus of the People's 
        Republic of China with the United States strongly suggests that 
        the RMB is undervalued against the dollar. Recently, economists 
        have estimated that the RMB is undervalued against the United 
        States dollar by as much as 40 percent.
            (11) Import tariffs of the People's Republic of China 
        currently average about 15 percent. Assuming the recent 
        estimates of Chinese RMB undervaluation against the dollar are 
        correct, the effect of a free and open currency market would be 
        more than twice as large as the effect of eliminating every 
        tariff that the People's Republic of China imposes on United 
        States goods.
            (12) In the long run, revaluation of the RMB by the 
        Government of the People's Republic of China would mitigate the 
        ever increasing United States trade deficit with that country.
            (13) The President should formally initiate action against 
        the People's Republic of China, on account of the manipulation 
        of its currency, pursuant to article XV of the GATT 1994, the 
        rules of the International Monetary Fund, and sections 301 
        through 309 of the Trade Act of 1974.
    (b) Definition.--In this section the term ``GATT 1994'' has the 
meaning given that term in section 2 of the Uruguay Round Agreements 
Act (19 U.S.C. 3501).

SEC. 3. ANALYSIS OF AND REPORT ON EXCHANGE RATE POLICIES OF CHINA.

    (a) Analysis.--The Secretary of the Treasury shall, upon the 
enactment of this Act and annually thereafter, analyze the exchange 
rate policies of the People's Republic of China in order to determine 
whether that country manipulates the rate of exchange between the 
currency of that country and the United States dollar for purposes of 
preventing effective balance of payments adjustments or gaining an 
unfair competitive advantage in international trade.
    (b) Computation of Rate of Manipulation.--If the Secretary of the 
Treasury makes an affirmative determination under subsection (a), the 
Secretary shall compute the rate of manipulation against the dollar in 
the form of a percentage.
    (c) Reports to Congress.--The Secretary of the Treasury shall 
submit to the Committee on Ways and Means of the House of 
Representatives and to the Committee on Finance of the Senate a report 
on the Secretary's analysis and findings under subsection (a), and any 
rate computed under subsection (b). The report shall be submitted--
            (1) with respect to the analysis conducted upon the 
        enactment of this Act, not later than 60 days after the date of 
        the enactment of this Act; and
            (2) with respect to each subsequent analysis, at the end of 
        each 1-year period thereafter.

SEC. 4. ADDITIONAL TARIFFS.

    (a) Additional Tariff.--In any case in which a report of the 
Secretary of the Treasury submitted under section 3(c) includes a rate 
of manipulation under section 3(b), the Secretary shall, not later than 
30 days after the report is submitted, impose on all products of China 
that enter the customs territory of the United States, in addition to 
any duty that otherwise applies, a tariff equal to the applicable 
percentage of the appraised value of the product at the time of entry. 
For purposes of this subsection, the ``applicable percentage'' is the 
percentage equal to the rate of manipulation.
    (b) Annual Modification.--Any tariff imposed under subsection (a) 
shall be modified annually to the extent necessary to comply with the 
most recent report of the Secretary of the Treasury under section 3(c).