II 

109TH CONGRESS 

1ST SESSION S. 295 

To authorize appropriate action if the negotiations with the People’s Republic 

of China regarding China’s undervalued currency are not successful. 

IN THE SENATE OF THE UNITED STATES 

FEBRUARY 3, 2005 

Mr. SCHUMER (for himself, Mr. GRAHAM, Mr. BUNNING, Mr. DURBIN, Mr. 

REID, Mr. KOHL, Mrs. DOLE, Ms. STABENOW, Mr. DODD, Mr. LEVIN, 

Mrs. CLINTON, Mr. BAYH, and Mr. DEWINE) introduced the following 

bill; which was read twice and referred to the Committee on Finance 

A BILL 

To authorize appropriate action if the negotiations with the 

People’s Republic of China regarding China’s undervalued currency are not successful. 

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

3 SECTION 1. NEGOTIATIONS REGARDING CURRENCY VALU4 ATION. 

5 (a) FINDINGS.—Congress makes the following find6 ings: 

7 (1) The currency of the People’s Republic of 

8 China, known as the yuan or renminbi, is artificially 

9 pegged at a level significantly below its market 
2 

•S 295 IS

1 value. Economists estimate the yuan to be under2 valued by between 15 percent and 40 percent or an 

3 average of 27.5 percent. 

4 (2) The undervaluation of the yuan provides the 

5 People’s Republic of China with a significant trade 

6 advantage by making exports less expensive for for7 eign consumers and by making foreign products 

8 more expensive for Chinese consumers. The effective 

9 result is a significant subsidization of China’s ex10 ports and a virtual tariff on foreign imports. 

11 (3) The Government of the People’s Republic of 

12 China has intervened in the foreign exchange mar13 kets to hold the value of the yuan within an artificial 

14 trading range. China’s foreign reserves are estimated 

15 to be over $609,900,000,000 as of January 12, 

16 2005, and have increased by over $206,700,000,000 

17 in the last 12 months. 

18 (4) China’s undervalued currency, China’s trade 

19 advantage from that undervaluation, and the Chi20 nese Government’s intervention in the value of its 

21 currency violates the spirit and letter of the world 

22 trading system of which the People’s Republic of 

23 China is now a member. 

24 (5) The Government of the People’s Republic of 

25 China has failed to promptly address concerns or to 
3 

•S 295 IS

1 provide a definitive timetable for resolution of these 

2 concerns raised by the United States and the inter3 national community regarding the value of its cur4 rency. 

5 (6) Article XXI of the GATT 1994 (as defined 

6 in section 2(1)(B) of the Uruguay Round Agree7 ments Act (19 U.S.C. 3501(1)(B))) allows a member 

8 of the World Trade Organization to take any action 

9 which it considers necessary for the protection of its 

10 essential security interests. Protecting the United 

11 States manufacturing sector is essential to the inter12 ests of the United States. 

13 (b) NEGOTIATIONS AND CERTIFICATION REGARDING

14 THE CURRENCY VALUATION POLICY OF THE PEOPLE’S

15 REPUBLIC OF CHINA.— 

16 (1) IN GENERAL.—Notwithstanding the provi17 sions of title I of Public Law 106–286 (19 U.S.C. 

18 2431 note), on and after the date that is 180 days 

19 after the date of enactment of this Act, unless a cer20 tification described in paragraph (2) has been made 

21 to Congress, in addition to any other duty, there 

22 shall be imposed a rate of duty of 27.5 percent ad 

23 valorem on any article that is the growth, product, 

24 or manufacture of the People’s Republic of China, 
4 

•S 295 IS

1 imported directly or indirectly into the United 

2 States. 

3 (2) CERTIFICATION.—The certification de4 scribed in this paragraph means a certification by 

5 the President to Congress that the People’s Republic 

6 of China is no longer acquiring foreign exchange re7 serves to prevent the appreciation of the rate of ex8 change between its currency and the United States 

9 dollar for purposes of gaining an unfair competitive 

10 advantage in international trade. The certification 

11 shall also include a determination that the currency 

12 of the People’s Republic of China has undergone a 

13 substantial upward revaluation placing it at or near 

14 its fair market value. 

15 (3) ALTERNATIVE CERTIFICATION.—If the 

16 President certifies to Congress 180 days after the 

17 date of enactment of this Act that the People’s Re18 public of China has made a good faith effort to re19 value its currency upward placing it at or near its 

20 fair market value, the President may delay the impo21 sition of the tariffs described in paragraph (1) for 

22 an additional 180 days. If at the end of the 180-day 

23 period the President determines that China has de24 veloped and started actual implementation of a plan 

25 to revalue its currency, the President may delay im-
5 

•S 295 IS

1 position of the tariffs for an additional 12 months, 

2 so that the People’s Republic of China shall have 

3 time to implement the plan. 

4 (4) NEGOTIATIONS.—Beginning on the date of 

5 enactment of this Act, the Secretary of the Treas6 ury, in consultation with the United States Trade 

7 Representative, shall begin negotiations with the 

8 People’s Republic of China to ensure that the Peo9 ple’s Republic of China adopts a process that leads 

10 to a substantial upward currency revaluation within 

11 180 days after the date of enactment of this Act. 

12 Because various Asian governments have also been 

13 acquiring substantial foreign exchange reserves in an 

14 effort to prevent appreciation of their currencies for 

15 purposes of gaining an unfair competitive advantage 

16 in international trade, and because the People’s Re17 public of China has concerns about the value of 

18 those currencies, the Secretary shall also seek to 

19 convene a multilateral summit to discuss exchange 

20 rates with representatives of various Asian govern21 ments and other interested parties, including rep22 resentatives of other G–7 nations. 

Æ