I 

108TH CONGRESS 

1ST SESSION H. R. 3058

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 

SEPTEMBER 10, 2003

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

REYNOLDS, Mr. SENSENBRENNER, Mr. HUNTER, Mrs. MYRICK, Mr. 

BURR, Mr. COBLE, Mr. GILLMOR, Mr. SOUDER, Mr. TAYLOR of North 

Carolina, Mr. GREENWOOD, Mr. HAYES, Mr. HOEKSTRA, Mr. COLLINS, 

Mr. ROHRABACHER, Mr. EVERETT, Mr. PLATTS, Mr. GALLEGLY, Mr. 

GOODE, Mr. PETERSON of Pennsylvania, Mr. DUNCAN, Mr. MURPHY, 

Mr. WILSON of South Carolina, Mr. OTTER, Mr. JONES of North Carolina, Mr. UPTON, Mr. BROWN of South Carolina, Mr. SHUSTER, Mr. 

BARRETT of South Carolina, Mr. LEWIS of Kentucky, Mr. WALSH, Mr. 

NORWOOD, Mr. SHAW, Mr. TERRY, and Mr. BISHOP of Utah) 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.
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1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Currency Harmoni5 zation Initiative through Neutralizing Action Act of 

6 2003’’. 

7 SEC. 2. FINDINGS. 

8 (a) FINDINGS.—The Congress finds as follows: 

9 (1) The benefit of trade concessions can be ad10 versely affected by misalignments in currency. 

11 (2) Misalignments in currency caused by gov12 ernment policies intended to maintain an unfair 

13 trade advantage nullify and impair trade conces14 sions. 

15 (3) Under article XV of the GATT 1994, a 

16 country is considered to be manipulating its cur17 rency to obtain an unfair trade advantage if—

18 (A) its currency manipulation has a sub19 sidy-like effect; 

20 (B) its currency manipulation constitutes a 

21 nullification and impairment of the benefits of 

22 the GATT 1994; or 

23 (C) its currency manipulation results in a 

24 contravention of the intention of the GATT 

25 1994. 
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1 (4) The International Monetary Fund also pro2 hibits the use of currency manipulation as a method 

3 of gaining unfair trade advantage. The International 

4 Monetary Fund defines such manipulation as large5 scale and protracted intervention in one direction to 

6 gain an unfair trade advantage. 

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

8 of 1974 contain the authority under United States 

9 law to take retaliatory action, including import re10 strictions, to enforce the rights of the United States 

11 against any unjustifiable, unreasonable, or discrimi12 natory practice or policy of a country that burdens 

13 or restricts United States commerce. 

14 (6) In 2002, the United States trade deficit 

15 with the People’s Republic of China exceeded 

16 $103,000,000,000, the largest bilateral trade deficit 

17 in the world. Based on the first four months of 

18 2003, the United States trade deficit with the Peo19 ple’s Republic of China is estimated to reach more 

20 than $120,000,000,000 in 2003. 

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

22 Republic of China have been growing at more than 

23 twice the rate of United States exports to that coun24 try. 
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1 (8) The People’s Republic of China is accumu2 lating foreign currency reserves, mostly United 

3 States dollars, at a rate of more than 

4 $6,000,000,000 per month; this intervention has 

5 kept the Chinese renminbi (RMB) from appreciating 

6 despite large trade surpluses and investment flows. 

7 China’s total foreign currency reserves currently 

8 stand at almost $300,000,000,000. 

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

10 currency pegged at approximately 8.3 RMB to the 

11 dollar since 1994. 

12 (10) The large and growing trade surplus of the 

13 People’s Republic of China with the United States 

14 strongly suggests that the RMB is undervalued 

15 against the dollar. Recently, economists have esti16 mated that the RMB is undervalued against the 

17 United States dollar by as much as 40 percent. 

18 (11) Import tariffs of the People’s Republic of 

19 China currently average about 15 percent. Assuming 

20 the recent estimates of Chinese RMB undervaluation 

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

22 and open currency market would be more than twice 

23 as large as the effect of eliminating every tariff that 

24 the People’s Republic of China imposes on United 

25 States goods. 
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1 (12) In the long run, revaluation of the RMB 

2 by the Government of the People’s Republic of 

3 China would mitigate the ever increasing United 

4 States trade deficit with that country. 

5 (13) The President should formally initiate ac6 tion against the People’s Republic of China, on ac7 count of the manipulation of its currency, pursuant 

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

9 International Monetary Fund, and sections 301 

10 through 309 of the Trade Act of 1974. 

11 (b) DEFINITION.—In this section the term ‘‘GATT 

12 1994’’ has the meaning given that term in section 2 of 

13 the Uruguay Round Agreements Act (19 U.S.C. 3501). 

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

15 POLICIES OF CHINA. 

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

17 upon the enactment of this Act and annually thereafter, 

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

19 of China in order to determine whether that country ma20 nipulates the rate of exchange between the currency of 

21 that country and the United States dollar for purposes 

22 of preventing effective balance of payments adjustments 

23 or gaining an unfair competitive advantage in inter24 national trade. 
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1 (b) COMPUTATION OF RATE OF MANIPULATION.—If 

2 the Secretary of the Treasury makes an affirmative deter3 mination under subsection (a), the Secretary shall com4 pute the rate of manipulation against the dollar in the 

5 form of a percentage. 

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

7 Treasury shall submit to the Committee on Ways and 

8 Means of the House of Representatives and to the Com9 mittee on Finance of the Senate a report on the Sec10 retary’s analysis and findings under subsection (a), and 

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

12 be submitted—

13 (1) with respect to the analysis conducted upon 

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

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

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

17 the end of each 1-year period thereafter. 

18 SEC. 4. ADDITIONAL TARIFFS. 

19 (a) ADDITIONAL TARIFF.—In any case in which a re20 port of the Secretary of the Treasury submitted under sec21 tion 3(c) includes a rate of manipulation under section 

22 3(b), the Secretary shall, not later than 30 days after the 

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

24 enter the customs territory of the United States, in addi25 tion to any duty that otherwise applies, a tariff equal to 
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1 the applicable percentage of the appraised value of the 

2 product at the time of entry. For purposes of this sub3 section, the ‘‘applicable percentage’’ is the percentage 

4 equal to the rate of manipulation. 

5 (b) ANNUAL MODIFICATION.—Any tariff imposed 

6 under subsection (a) shall be modified annually to the ex7 tent necessary to comply with the most recent report of 

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

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