I 

109TH CONGRESS 

1ST SESSION H. R. 3004 

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. 

IN THE HOUSE OF REPRESENTATIVES 

JUNE 21, 2005 

Mr. ENGLISH of Pennsylvania (for himself, Mr. GREEN of Wisconsin, Mr. 

CHOCOLA, Mr. HAYES, Mr. REYNOLDS, Mr. PLATTS, Mr. WICKER, Mr. 

NORWOOD, Mr. GERLACH, Mr. UPTON, Mr. EHLERS, Mr. SHERMAN, Mr. 

SHUSTER, Mrs. MYRICK, Mr. ETHERIDGE, Mr. MCHUGH, Mr. WALSH, 

Mr. GILLMOR, Mr. GOODLATTE, Mr. MURPHY, and Mr. DOYLE) introduced the following bill; which was referred to the Committee on Ways 

and Means 

A BILL 

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. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 
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1 SECTION 1. SHORT TITLE. 

2 This Act may be cited as the ‘‘Currency Harmoni3 zation Initiative Through Neutralizing Action Act of 

4 2005’’. 

5 SEC. 2. FINDINGS. 

6 The Congress finds as follows: 

7 (1) The benefit of trade concessions can be ad8 versely affected by misalignments in currency. 

9 (2) Misalignments in currency caused by gov10 ernment policies intended to maintain an unfair 

11 trade advantage nullify and impair trade conces12 sions. 

13 (3) Article XV of the GATT 1994 prohibits 

14 WTO members from, by exchange rate action, frus15 trating the intent of the provisions of that Agree16 ment, nor, by trade action, the intent of the provi17 sions of the Articles of Agreement of the Inter18 national Monetary Fund. 

19 (4) The International Monetary Fund prohibits 

20 the use of currency manipulation as a method of 

21 gaining unfair trade advantage. The International 

22 Monetary Fund defines such manipulation as large23 scale and protracted intervention in one direction to 

24 gain an unfair trade advantage. 

25 (5) Sections 301 through 309 of the Trade Act 

26 of 1974 contain the authority under United States 
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1 law to take retaliatory action, including import re2 strictions, to enforce the rights of the United States 

3 against any unjustifiable, unreasonable, or discrimi4 natory practice or policy of a country that burdens 

5 or restricts United States commerce. 

6 (6) The United States trade deficit with the 

7 People’s Republic of China was $162,000,000,000 in 

8 2004, the largest bilateral trade deficit in the world. 

9 (7) United States imports from the People’s 

10 Republic of China have been growing faster than the 

11 rate of United States exports to that country. 

12 (8) The People’s Republic of China is accumu13 lating foreign currency reserves, mostly United 

14 States dollars. In 2004, reserves increased by more 

15 than 40 percent, reaching a cumulative total of more 

16 than $600,000,000,000. 

17 (9) The People’s Republic of China has kept its 

18 currency pegged at approximately 8.3 RMB to the 

19 dollar since 1994. 

20 (10) The large and growing accumulation of 

21 foreign currency reserves by the People’s Republic of 

22 China strongly suggests that the RMB is under23 valued against the dollar. Economists have estimated 

24 that the RMB is undervalued against the United 

25 States dollar by as much as 40 percent. 
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1 (11) Import tariffs of the People’s Republic of 

2 China currently average about 15 percent. Assuming 

3 the recent estimates of Chinese RMB undervaluation 

4 against the dollar are correct, the effect of a free 

5 and open currency market would be more than twice 

6 as large as the effect of eliminating every tariff that 

7 the People’s Republic of China imposes on United 

8 States goods. 

9 (12) The President should formally initiate ac10 tion against the People’s Republic of China, on ac11 count of the manipulation of its currency, pursuant 

12 to article XV of the GATT 1994, the rules of the 

13 International Monetary Fund, sections 122 and 301 

14 through 309 of the Trade Act of 1974 (19 U.S.C. 

15 2132 and 2411 through 2419), and section 3004 of 

16 the Omnibus Trade and Competitiveness Act of 

17 1988 (22 U.S.C. 5304). 

18 (13) The President should, without weakening 

19 or impairing existing trade remedies, clarify and im20 prove World Trade Organization rules with regard 

21 to currency manipulation for trade advantage to re22 flect modern day monetary policy not envisioned at 

23 the time current rules were adopted in 1947, and re24 port to Congress on ways to increase oversight and 

25 input opportunities for Congress in the interaction 
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1 of the United States in the World Trade Organiza2 tion. 

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

4 POLICIES OF CHINA. 

5 (a) ANALYSIS.—The Secretary of the Treasury shall, 

6 upon the enactment of this Act and annually thereafter, 

7 analyze the exchange rate policies of the People’s Republic 

8 of China in order to determine whether that country ma9 nipulates the rate of exchange between the currency of 

10 that country and the United States dollar, within the 

11 meaning of article XV of the GATT 1994. 

12 (b) COMPUTATION OF RATE OF MANIPULATION.—If 

13 the Secretary of the Treasury makes an affirmative deter14 mination under subsection (a), the Secretary shall com15 pute the rate of manipulation against the dollar in the 

16 form of a percentage. 

17 (c) REPORTS TO CONGRESS.—The Secretary of the 

18 Treasury shall submit to the Committee on Ways and 

19 Means of the House of Representatives and to the Com20 mittee on Finance of the Senate a report on the Sec21 retary’s analysis and findings under subsection (a), and 

22 any rate computed under subsection (b). The report shall 

23 be submitted— 
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1 (1) with respect to the analysis conducted upon 

2 the enactment of this Act, not later than 60 days 

3 after the date of the enactment of this Act; and 

4 (2) with respect to each subsequent analysis, at 

5 the end of each 1-year period thereafter. 

6 SEC. 4. ADDITIONAL TARIFFS. 

7 (a) ADDITIONAL TARIFF.—In any case in which a re8 port of the Secretary of the Treasury submitted under sec9 tion 3(c) includes a rate of manipulation under section 

10 3(b), the Secretary shall, not later than 30 days after the 

11 report is submitted, impose on all products of China that 

12 enter the customs territory of the United States, in addi13 tion to any duty that otherwise applies, a tariff equal to 

14 the applicable percentage of the appraised value of the 

15 product at the time of entry. For purposes of this sub16 section, the ‘‘applicable percentage’’ is the percentage 

17 equal to the rate of manipulation. 

18 (b) ANNUAL MODIFICATION.—Any tariff imposed 

19 under subsection (a) shall be modified annually to the ex20 tent necessary to comply with the most recent report of 

21 the Secretary of the Treasury under section 3(c). 

22 SEC. 5. DEFINITIONS. 

23 In this Act, the terms ‘‘GATT 1994’’ and ‘‘WTO 

24 member’’ have the meanings given those terms in section 
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1 2 of the Uruguay Round Agreements Act (19 U.S.C. 

2 3501). 

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