I 

111TH CONGRESS 

1ST SESSION H. R. 2378 

To amend title VII of the Tariff Act of 1930 to clarify that fundamental 

exchange-rate misalignment by any foreign nation is actionable under 

United States countervailing and antidumping duty laws, and for other 

purposes. 

IN THE HOUSE OF REPRESENTATIVES 

MAY 13, 2009 

Mr. RYAN of Ohio (for himself, Mr. TIM MURPHY of Pennsylvania, Mr. 

ALTMIRE, Mr. JONES, Mr. DEFAZIO, Mr. WILSON of Ohio, Mr. BURTON

of Indiana, Mr. MICHAUD, Mr. SOUDER, Mr. SHULER, Mr. MCHUGH, 

Mr. COBLE, Mr. BARRETT of South Carolina, Mr. BOUCHER, Ms. SUTTON, Mr. PLATTS, Mr. ARCURI, Mr. HIGGINS, Mr. BOSWELL, Mr. CONYERS, Mr. GENE GREEN of Texas, Ms. EDDIE BERNICE JOHNSON of 

Texas, Mr. COSTELLO, Mr. LEE of New York, Mr. HOLT, Mr. WESTMORELAND, Mr. ROHRABACHER, Mr. SHUSTER, Mr. BRALEY of Iowa, 

Mr. WILSON of South Carolina, Mr. HOLDEN, Mr. OLVER, Mr. KAGEN, 

Mr. KILDEE, Mr. HARE, Mrs. MYRICK, Mr. VISCLOSKY, Mr. MANZULLO, 

Mr. ROGERS of Michigan, and Mr. BROWN of South Carolina) introduced 

the following bill; which was referred to the Committee on Ways and 

Means 

A BILL 

To amend title VII of the Tariff Act of 1930 to clarify 

that fundamental exchange-rate misalignment by any foreign nation is actionable under United States countervailing and antidumping duty laws, and for other purposes. 

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 Reform for 

3 Fair Trade Act’’. 

4 SEC. 2. FINDINGS. 

5 Congress makes the following findings: 

6 (1) The strength, vitality, and stability of the 

7 United States economy and, more broadly, the open8 ness and effectiveness of the global trading system 

9 are critically dependent upon an international mone10 tary regime of orderly and flexible exchange rates. 

11 (2) Increasingly in recent years, a number of 

12 foreign governments have undervalued their cur13 rencies by means of protracted, large-scale interven14 tion directly or indirectly through surrogates in for15 eign exchange markets, and this fundamental mis16 alignment has substantially contributed to distor17 tions in trade flows, unsustainable current account 

18 imbalances, and serious competitive problems for 

19 countries like the United States that permit their 

20 currencies to fluctuate in response to changes in 

21 market forces. 

22 (3) This exchange depreciation serves as a sub23 sidy for, and facilitates dumping of, exports from 

24 countries that engage in this mercantilist practice. 

25 (4) It is consistent with the agreements of the 

26 World Trade Organization and the International 


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1 Monetary Fund that United States trade law be 

2 amended to clarify and make explicit that funda3 mental undervaluation by an exporting country of its 

4 currency is actionable as a countervailable export 

5 subsidy and alternatively can be offset by anti6 dumping duties when injury to producers and work7 ers in the United States is caused by such subsidized 

8 and dumped imports. 

9 SEC. 3. FUNDAMENTAL AND ACTIONABLE MISALIGNMENT 

10 OF A CURRENCY. 

11 (a) IN GENERAL.—Subtitle D of title VII of the Tar12 iff Act of 1930 (19 U.S.C. 1677 et seq.) is amended by 

13 inserting after section 771B the following new section: 

14 ‘‘SEC. 771C. FUNDAMENTAL AND ACTIONABLE MISALIGN15 MENT OF A CURRENCY. 

16 ‘‘(a) FUNDAMENTAL AND ACTIONABLE UNDERVALU17 ATION OF A CURRENCY.—For purposes of subsection (c), 

18 the currency of an exporting country is fundamentally and 

19 actionably undervalued if— 

20 ‘‘(1) the real effective exchange rate of the ex21 porting country’s currency is undervalued by at least 

22 5 percent, on average, during an 18-month period 

23 that represents the most recent 18 months for which 

24 the information required under subsection (c) is rea25 sonably available, but that does not include any time 


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1 later than the final month in the period of investiga2 tion or the period of review, as applicable; 

3 ‘‘(2) during part or all of the 18-month period, 

4 the government of the exporting country has en5 gaged directly or indirectly through surrogates in 

6 protracted, large-scale intervention in foreign ex7 change markets, and that intervention has involved 

8 the direct transfer of funds or the potential direct 

9 transfer of funds or liabilities; 

10 ‘‘(3) during part or all of the 18-month period, 

11 the exporting country has experienced a significant 

12 and prolonged global current account surplus; 

13 ‘‘(4) during part or all of the 18-month period, 

14 the exporting country has experienced a significant 

15 and prolonged bilateral current account surplus with 

16 the United States; and 

17 ‘‘(5) during part or all of the 18-month period, 

18 the foreign exchange reserves held or controlled by 

19 the government of the exporting country have ex20 ceeded the amount necessary to repay its external 

21 debt obligations falling due within the coming 12 

22 months, except that the requirement of this para23 graph shall not be satisfied and no fundamental and 

24 actionable undervaluation shall be found as to the 

25 currency of an exporting country if the exporting 


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1 country during any part of the 18-month period has 

2 been allowed under article XII or article XVIII, sec3 tion B of the GATT 1994 (as defined in section 

4 2(1)(B) of the Uruguay Round Agreements Act (19 

5 U.S.C. 3501(1)(B)) to impose restrictions to safe6 guard its balance of payments. 

7 ‘‘(b) FUNDAMENTAL AND ACTIONABLE OVER8 VALUATION OF A CURRENCY.—For purposes of subsection 

9 (c), the currency of an exporting country is fundamentally 

10 and actionably overvalued if— 

11 ‘‘(1) the real effective exchange rate of the ex12 porting country’s currency is overvalued by at least 

13 5 percent, on average, during an 18-month period 

14 that represents the most recent 18 months for which 

15 the information required under subsection (c) is rea16 sonably available, but that does not include any time 

17 later than the final month in the period of investiga18 tion or the period of review, as applicable; 

19 ‘‘(2) during part or all of the 18-month period, 

20 the government of the exporting country has en21 gaged directly or indirectly through surrogates in 

22 protracted, large-scale intervention in foreign ex23 change markets, and that intervention has involved 

24 the direct transfer of funds or the potential direct 

25 transfer of funds or liabilities; 


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1 ‘‘(3) during part or all of the 18-month period, 

2 the exporting country has experienced a significant 

3 and prolonged global current account deficit; 

4 ‘‘(4) during part or all of the 18-month period, 

5 the exporting country has experienced a significant 

6 and prolonged bilateral current account deficit with 

7 the United States; and 

8 ‘‘(5) during part or all of the 18-month period, 

9 the foreign exchange reserves held or controlled by 

10 the government of the exporting country have been 

11 less than the amount necessary to repay its external 

12 debt obligations falling due within the coming 12 

13 months, except that the requirement of this para14 graph shall not be satisfied and no fundamental and 

15 actionable overvaluation shall be found as to the cur16 rency of an exporting country if the exporting coun17 try during any part of the 18-month period has been 

18 allowed under article XII or article XVIII, section B 

19 of the GATT 1994 (as defined in section 2(1)(B) of 

20 the Uruguay Round Agreements Act (19 U.S.C. 

21 3501(1)(B)) to impose restrictions to safeguard its 

22 balance of payments. 

23 ‘‘(c) IDENTIFICATION OF FUNDAMENTAL AND AC24 TIONABLE MISALIGNMENT OF A CURRENCY.—In calcu25 lating under subsection (a) or (b) whether the currency 


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1 of an exporting country was fundamentally and actionably 

2 misaligned during the applicable 18-month period de3 scribed in such subsection, the administering authority 

4 shall— 

5 ‘‘(1) measure the level of any such misalign6 ment as the simple average of the results yielded 

7 from application of the macroeconomic-balance ap8 proach and the equilibrium-real-exchange-rate ap9 proach; 

10 ‘‘(2) rely upon data that are publicly available, 

11 reliable, and compiled and maintained by the Inter12 national Monetary Fund or the World Bank or, if 

13 the International Monetary Fund or the World Bank 

14 cannot provide such data, by other international or15 ganizations or by national governments; 

16 ‘‘(3) for the purposes of the initiation and the 

17 preliminary and final determinations of an investiga18 tion and for purposes of the preliminary and final 

19 results of a review, rely upon data for an 18-month 

20 period that represents the most recent 18 months 

21 for which the information needed under this sub22 section is reasonably available at the time, but that 

23 does not include any time later than the final month 

24 in the period of investigation or the period of review, 

25 as applicable; 


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1 ‘‘(4) use inflation-adjusted, trade-weighted ex2 change rates; 

3 ‘‘(5) implement the macroeconomic-balance ap4 proach and the equilibrium-real-exchange-rate ap5 proach using the methodologies described in the 

6 guidelines of the International Monetary Fund’s 

7 Consultative Group on Exchange Rate Issues, when8 ever possible; and 

9 ‘‘(6) in the event that the guidelines of the 

10 International Monetary Fund’s Consultative Group 

11 on Exchange Rate Issues are not available, employ 

12 generally accepted economic and econometric tech13 niques to implement the macroeconomic-balance ap14 proach and the equilibrium-real-exchange-rate ap15 proach. 

16 ‘‘(d) IDENTIFICATION OF UNDERVALUATION OR

17 OVERVALUATION OF A CURRENCY DURING THE PERIOD

18 OF INVESTIGATION OR THE PERIOD OF REVIEW.—If fun19 damental and actionable misalignment within the meaning 

20 of subsection (a) or (b) is identified under subsection (c) 

21 as to an exporting country’s currency for the applicable 

22 18-month period described in subsection (a) or (b), the 

23 administering authority shall— 

24 ‘‘(1) calculate for the period of investigation or 

25 the period of review, as applicable, the level of 


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1 undervaluation or overvaluation, as the case may be, 

2 of the real effective exchange rate of the exporting 

3 country’s currency in accordance with the proce4 dures, methodologies, and standards set forth in 

5 subsection (c); 

6 ‘‘(2) calculate for the period of investigation or 

7 the period of review, as applicable, using the results 

8 from each approach described in subsection (c)(1), 

9 the level of undervaluation or overvaluation, as the 

10 case may be, of the real exchange rate between the 

11 exporting country and the United States, deriving 

12 such level from each level of undervaluation or over13 valuation, as the case may be, of the real effective 

14 exchange rate determined under paragraph (1) by 

15 allocating appreciations or depreciations, as the case 

16 may be, in the bilateral real exchange rates of the 

17 exporting country to its trading partners on the 

18 basis of the overall current account balances of such 

19 trading partners; and 

20 ‘‘(3) take the simple average of each level of 

21 undervaluation or overvaluation, as the case may be, 

22 calculated under paragraph (2) to measure the level 

23 of undervaluation or overvaluation, as the case may 

24 be, of the bilateral real exchange rate between the 

25 exporting country and the United States. 


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1 ‘‘(e) CONSIDERATION OF UNDERVALUATION OF A

2 CURRENCY IN COUNTERVAILING AND ANTIDUMPING

3 DUTY PROCEEDINGS.—If the administering authority de4 termines under subsection (d) that the currency of an ex5 porting country was undervalued in relation to the United 

6 States dollar during the period of investigation or the pe7 riod of review, as applicable— 

8 ‘‘(1) in a countervailing duty proceeding, the 

9 administering authority shall include in the net 

10 countervailable subsidy the amount that reflects the 

11 level of undervaluation determined under subsection 

12 (d)(3) in the bilateral real exchange rate between the 

13 currency of the exporting country and the United 

14 States dollar; and 

15 ‘‘(2) in an antidumping duty proceeding, the 

16 administering authority shall adjust the export price 

17 and constructed export price downward by the 

18 amount that reflects the level of undervaluation de19 termined under subsection (d)(3) in the bilateral real 

20 exchange rate between the currency of the exporting 

21 country and the United States dollar. 

22 ‘‘(f) CONSIDERATION OF OVERVALUATION OF A CUR23 RENCY IN ANTIDUMPING DUTY PROCEEDINGS.—If the 

24 administering authority determines under subsection (d) 

25 that the currency of an exporting country was overvalued 


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1 in relation to the United States dollar during the period 

2 of investigation or the period of review, as applicable, the 

3 administering authority shall adjust the export price and 

4 constructed export price upward by the amount that re5 flects the level of overvaluation determined under sub6 section (d)(3) in the bilateral real exchange rate between 

7 the currency of the exporting country and the United 

8 States dollar. 

9 ‘‘(g) TYPE OF ECONOMY.—Any determination with 

10 respect to the currency of an exporting country by the ad11 ministering authority under this section shall be made re12 gardless of whether the exporting country has a market 

13 economy, a nonmarket economy, or a combination thereof. 

14 ‘‘(h) DEFINITIONS.—In this section: 

15 ‘‘(1) PROTRACTED, LARGE-SCALE INTERVEN16 TION IN FOREIGN EXCHANGE MARKETS.— 

17 ‘‘(A) IN GENERAL.—The term ‘protracted, 

18 large-scale intervention in foreign exchange 

19 markets’ means involvement in foreign ex20 change markets by the government of an ex21 porting country, either directly or indirectly 

22 through surrogates, in such a way as to con23 tribute significantly to fundamental and action24 able misalignment of the currency of the export25 ing country within the meaning of subsection 


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1 (a) or (b). Such involvement may include one or 

2 more of the following: 

3 ‘‘(i) Governmental purchases, sales, or 

4 other exchanges of currencies in foreign ex5 change markets. 

6 ‘‘(ii) Requirement by law or policy of 

7 the government of the exporting country 

8 that some or all of the foreign currency 

9 earnings by an exporter or producer in the 

10 exporting country be converted into the 

11 currency of the exporting country. 

12 ‘‘(iii) Any other practice by the gov13 ernment of the exporting country that has 

14 the effect of causing fundamental and ac15 tionable misalignment of the exchange rate 

16 of the exporting country’s currency and 

17 that involves the direct transfer of funds or 

18 the potential direct transfer of funds or li19 abilities. 

20 ‘‘(B) RULE OF CONSTRUCTION.—Funda21 mental and actionable misalignment of the cur22 rency of an exporting country within the mean23 ing of subsection (a) or (b) shall be attributed 

24 to the protracted, large-scale intervention in 

25 foreign exchange markets by the government of 


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1 the exporting country unless it is determined 

2 that such intervention was not a significant 

3 cause of the fundamental and actionable mis4 alignment. 

5 ‘‘(2) MACROECONOMIC-BALANCE APPROACH.— 

6 The term ‘macroeconomic-balance approach’ means 

7 a methodology under which the level of undervalu8 ation or overvaluation of the real effective exchange 

9 rate of the exporting country’s currency is defined as 

10 the change in the real effective exchange rate needed 

11 to achieve equilibrium in the exporting country’s bal12 ance of payments. 

13 ‘‘(3) EQUILIBRIUM-REAL-EXCHANGE-RATE AP14 PROACH.—The term ‘equilibrium-real-exchange-rate 

15 approach’ means a methodology under which the 

16 level of undervaluation or overvaluation of the real 

17 effective exchange rate of the exporting country’s 

18 currency is defined as the difference between the ob19 served real effective exchange rate and the real ef20 fective exchange rate predicted by an econometric 

21 model.’’. 

22 (b) CLERICAL AMENDMENT.—The table of contents 

23 of title VII of the Tariff Act of 1930 is amended by insert24 ing after the item relating to section 771B the following 

25 new item: 

‘‘Sec. 771C. Fundamental and actionable misalignment of a currency.’’. 


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1 SEC. 4. CLARIFICATIONS REGARDING DEFINITION OF 

2 COUNTERVAILABLE SUBSIDY. 

3 (a) FINANCIAL CONTRIBUTION.—Section 771(5)(D) 

4 of the Tariff Act of 1930 (19 U.S.C. 1677(5)(D)) is 

5 amended by adding at the end the following new sentence: 

6 ‘‘A fundamentally and actionably undervalued cur7 rency (as determined under section 771C) constitutes a 

8 financial contribution under clause (i).’’ 

9 (b) BENEFIT CONFERRED.—Section 771(5)(E) of 

10 the Tariff Act of 1930 (19 U.S.C. 1677(5)(E)) is amend11 ed— 

12 (1) in clause (iii), by striking ‘‘and’’ at the end; 

13 (2) in clause (iv), by striking the period at the 

14 end and inserting ‘‘, and’’; and 

15 (3) by inserting after clause (iv) the following 

16 new clause: 

17 ‘‘(v) in the case of a fundamentally 

18 and actionably undervalued currency (as 

19 determined under section 771C), if the ex20 porter or producer receives or is entitled to 

21 receive more of the exporting country’s 

22 currency in exchange for the United States 

23 dollars paid for the subject merchandise 

24 than if the exporting country’s currency 

25 were not fundamentally and actionably un26 dervalued.’’. 


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1 (c) SPECIFICITY.—Section 771(5A)(B) of the Tariff 

2 Act of 1930 (19 U.S.C. 1677(5A)(B)) is amended by add3 ing at the end the following new sentence: ‘‘For purposes 

4 of this subparagraph, a fundamentally and actionably un5 dervalued currency (as determined under section 771C) 

6 constitutes an export subsidy.’’. 

7 SEC. 5. CLARIFICATIONS REGARDING DUMPING. 

8 (a) ADJUSTMENTS FOR EXPORT PRICE AND CON9 STRUCTED EXPORT PRICE.—Section 772(c) of the Tariff 

10 Act of 1930 (19 U.S.C. 1677a(c)) is amended— 

11 (1) in paragraph (1)— 

12 (A) in subparagraph (B) by striking ‘‘and’’ 

13 at the end; and 

14 (B) by adding at the end the following new 

15 subparagraph: 

16 ‘‘(D) the amount that reflects the level of 

17 overvaluation in the bilateral real exchange rate 

18 between the exporting country and the United 

19 States (as determined under section 771C), 

20 and’’; and 

21 (2) in paragraph (2)— 

22 (A) in subparagraph (A) by striking ‘‘and’’ 

23 at the end; 

24 (B) in subparagraph (B), by striking the 

25 period at the end and inserting ‘‘, and’’; and 


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1 (C) by adding at the end the following new 

2 subparagraph: 

3 ‘‘(C) the amount that reflects the level of 

4 undervaluation in the bilateral real exchange 

5 rate between the exporting country and the 

6 United States (as determined under section 

7 771C).’’. 

8 (b) AMENDMENTS TO DEFINITION OF NONMARKET

9 ECONOMY COUNTRY.—Section 771(18)(B) of the Tariff 

10 Act of 1930 (19 U.S.C. 1677(18)(B)) is amended— 

11 (1) in clause (v), by striking ‘‘and’’ at the end; 

12 (2) by redesignating clause (vi) as clause (vii); 

13 and 

14 (3) by inserting after clause (v) the following 

15 new clause: 

16 ‘‘(vi) whether in the view of the ad17 ministering authority the currency of the 

18 foreign country is fundamentally and ac19 tionably undervalued or fundamentally and 

20 actionably overvalued (as determined under 

21 section 771C), and’’. 

22 SEC. 6. APPLICATION TO GOODS FROM CANADA AND MEX23 ICO. 

24 Pursuant to article 1902 of the North American Free 

25 Trade Agreement and section 408 of the North American 


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1 Free Trade Agreement Implementation Act of 1993 (19 

2 U.S.C. 3438), the amendments made by this Act shall 

3 apply with respect to goods from Canada and Mexico. 

4 SEC. 7. EFFECTIVE DATE. 

5 The amendments made by this Act apply with respect 

6 to countervailing and antidumping duty proceedings initi7 ated under title VII of the Tariff Act of 1930 before, on, 

8 or after the date of enactment of this Act. 

Æ 


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