II 

110TH CONGRESS 

1ST SESSION S. 796 

To amend title VII of the Tariff Act of 1930 to provide that exchangerate misalignment by any foreign nation is a countervailable export 

subsidy, to amend the Exchange Rates and International Economic Policy 

Coordination Act of 1988 to clarify the definition of manipulation with 

respect to currency, and for other purposes. 

IN THE SENATE OF THE UNITED STATES 

MARCH 7, 2007 

Mr. BUNNING (for himself, Ms. STABENOW, Mr. BAYH, Ms. SNOWE, and Mr. 

LEVIN) introduced the following bill; which was read twice and referred 

to the Committee on Finance 

A BILL 

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

that exchange-rate misalignment by any foreign nation 

is a countervailable export subsidy, to amend the Exchange Rates and International Economic Policy Coordination Act of 1988 to clarify the definition of manipulation with respect to currency, 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, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Fair Currency Act of 

5 2007’’. 


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1 TITLE I—SUBSIDIES AND PROD2 UCT-SPECIFIC SAFEGUARD 

3 MECHANISM 

4 SEC. 101. FINDINGS. 

5 Congress makes the following findings: 

6 (1) The economy and national security of the 

7 United States are critically dependent upon a vi8 brant manufacturing and agricultural base. 

9 (2) The good health of United States manufac10 turing and agriculture requires, among other things, 

11 unfettered access to open markets abroad and fairly 

12 traded raw materials and products in accord with 

13 the international legal principles and agreements of 

14 the World Trade Organization and the International 

15 Monetary Fund. 

16 (3) The International Monetary Fund, the G– 

17 8, and other international organizations have repeat18 edly noted that exchange-rate misalignment can 

19 cause imbalances in the international trading system 

20 that could ultimately undercut the stability of the 

21 system, but have taken no action to redress such 

22 misalignments and imbalances. 

23 (4) Since 1994, the People’s Republic of China 

24 and other countries have repeatedly intervened in 

25 currency markets and taken measures that have sigVerDate Aug 31 2005 16:49 Mar 10, 2007 Jkt 059196 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S796.IS S796

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1 nificantly misaligned the values of their currencies 

2 against the United States dollar and other cur3 rencies. 

4 (5) This policy by the People’s Republic of 

5 China, for example, has resulted in substantial 

6 undervaluation of the renminbi, by up to 40 percent 

7 or more. 

8 (6) Evidence of this undervaluation can be 

9 found in the large and growing annual trade sur10 pluses of the People’s Republic of China; substan11 tially expanding foreign direct investment in China; 

12 and the rapidly increasing aggregate amount of for13 eign currency reserves that are held by the People’s 

14 Republic of China. 

15 (7) Undervaluation by the People’s Republic of 

16 China and by other countries acts as both a subsidy 

17 for their exports and as a nontariff barrier against 

18 imports into their territories, to the serious det19 riment of United States manufacturing and agri20 culture. 

21 (8)(A) As members of both the World Trade 

22 Organization and the International Monetary Fund, 

23 the People’s Republic of China and other countries 

24 have assumed a series of international legal obliga25 tions to eliminate all subsidies for exports and to faVerDate Aug 31 2005 16:49 Mar 10, 2007 Jkt 059196 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\S796.IS S796

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1 cilitate international trade by fostering a monetary 

2 system that does not tend to produce erratic disrup3 tions, that does not prevent effective balance-of-pay4 ments adjustment, and that does not gain unfair 

5 competitive advantage. 

6 (B) These obligations are most prominently set 

7 forth in— 

8 (i) Articles VI, XV, and XVI of the GATT 

9 1994 (as defined in section 2(1)(B) of the Uru10 guay Round Agreements Act (19 U.S.C. 

11 3501(1)(B)); 

12 (ii) the Agreement on Subsidies and Coun13 tervailing Measures (as described in section 

14 101(d)(12) of the Uruguay Round Agreements 

15 Act (19 U.S.C. 3511(d)(12)); and 

16 (iii) Articles IV and VIII of the Inter17 national Monetary Fund’s Articles of Agree18 ment. 

19 (9) Under the foregoing circumstances, it is 

20 consistent with the international legal obligations of 

21 the People’s Republic of China and similarly situ22 ated countries and with the corresponding inter23 national legal rights of the United States to amend 

24 relevant United States trade laws to make explicit 


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1 that exchange-rate misalignment by any country is 

2 actionable as a countervailable export subsidy. 

3 SEC. 102. APPLICATION OF COUNTERVAILING DUTIES TO 

4 NONMARKET ECONOMY COUNTRIES. 

5 (a) IN GENERAL.—Section 701(a)(1) of the Tariff 

6 Act of 1930 (19 U.S.C. 1671(a)(1)) is amended by insert7 ing ‘‘(including a nonmarket economy country)’’ after 

8 ‘‘country’’ each place it appears. 

9 (b) USE OF ALTERNATE METHODOLOGIES.—Section 

10 771(5)(E) of the Tariff Act of 1930 (19 U.S.C. 

11 1677(5)(E)) is amended by adding at the end the fol12 lowing: ‘‘With respect to a nonmarket economy country, 

13 for purposes of identifying and measuring a subsidy ben14 efit described in clause (i), (ii), (iii), or (iv), or otherwise 

15 conferred upon a recipient, the administering authority 

16 shall use methodologies that take into account the possi17 bility that prevailing terms and conditions in that country 

18 might not be available or might themselves be inappro19 priate benchmarks due to market distortions. In such cir20 cumstances, unless it is demonstrated that the nonmarket 

21 economy country’s prevailing terms and conditions prac22 ticably can be adjusted to serve as appropriate bench23 marks, the administering authority shall use as bench24 marks appropriate terms and conditions prevailing outside 

25 the nonmarket economy country. When the party in posVerDate Aug 31 2005 16:49 Mar 10, 2007 Jkt 059196 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\S796.IS S796

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1 session of the information necessary to identify and meas2 ure the benefit of a subsidy does not timely and completely 

3 submit that information for the record, the administering 

4 authority shall use for that purpose the facts otherwise 

5 available and shall, as warranted, draw adverse infer6 ences.’’. 

7 (c) ADJUSTMENTS FOR EXPORT PRICE AND CON8 STRUCTED EXPORT PRICE.—Section 772(c)(1)(C) of the 

9 Tariff Act of 1930 (19 U.S.C. 1677a(c)(1)(C)) is amended 

10 by inserting before the end comma the following: ‘‘, wheth11 er the subject merchandise is from a country with a mar12 ket economy, a nonmarket economy, or a combination 

13 thereof’’. 

14 (d) EFFECTIVE DATE.—The amendments made by 

15 subsections (a), (b), and (c) apply with respect to a coun16 tervailing duty proceeding initiated under subtitle A of 

17 title VII of the Tariff Act of 1930 before, on, or after 

18 the date of enactment of this Act. 

19 (e) ANTIDUMPING PROVISIONS NOT AFFECTED.— 

20 The amendments made by subsections (a), (b), and (c) 

21 shall not affect the status of a country as a nonmarket 

22 economy country for the purposes of any matter relating 

23 to antidumping duties under the Tariff Act of 1930. 


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1 SEC. 103. CLARIFICATION TO INCLUDE EXCHANGE-RATE 

2 MISALIGNMENT AS A COUNTERVAILABLE 

3 SUBSIDY UNDER TITLE VII OF THE TARIFF 

4 ACT OF 1930. 

5 (a) AMENDMENTS TO DEFINITION OF

6 COUNTERVAILABLE SUBSIDY.— 

7 (1) FINANCIAL CONTRIBUTION.—Section 

8 771(5)(D) of the Tariff Act of 1930 (19 U.S.C. 

9 1677(5)(D)) is amended— 

10 (A) by redesignating clauses (i) through 

11 (iv) as subclauses (I) through (IV), respectively; 

12 (B) by striking ‘‘The term’’ and inserting 

13 ‘‘(i) The term’’; and 

14 (C) by adding at the end the following: 

15 ‘‘(ii) Exchange-rate misalignment (as 

16 defined in paragraph (5C)) constitutes a 

17 financial contribution within the meaning 

18 of subclauses (I) and (III) of clause (i).’’. 

19 (2) BENEFIT CONFERRED.—Section 771(5)(E) 

20 of the Tariff Act of 1930 (19 U.S.C. 1677(5)(E)) is 

21 amended— 

22 (A) in clause (iii), by striking ‘‘, and’’ and 

23 inserting a comma; 

24 (B) in clause (iv), by striking the period at 

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


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1 (C) by inserting after clause (iv) the fol2 lowing new clause: 

3 ‘‘(v) in the case of exchange-rate mis4 alignment (as defined in paragraph (5C)), 

5 if the price of exported goods in United 

6 States dollars is less than what the price 

7 of such goods would be without the ex8 change-rate misalignment.’’. 

9 (3) SPECIFICITY.—Section 771(5A)(B) of the 

10 Tariff Act of 1930 (19 U.S.C. 1677(5A)(B)) is 

11 amended by inserting before the period at the end 

12 the following: ‘‘, such as exchange-rate misalignment 

13 (as defined in paragraph (5C))’’. 

14 (b) DEFINITION OF EXCHANGE-RATE MISALIGN15 MENT.—Section 771 of the Tariff Act of 1930 (19 U.S.C. 

16 1677) is amended by inserting after paragraph (5B) the 

17 following new paragraph: 

18 ‘‘(5C) EXCHANGE-RATE MISALIGNMENT.— 

19 ‘‘(A) IN GENERAL.—For purposes of para20 graphs (5) and (5A), the term ‘exchange-rate 

21 misalignment’ means an undervaluation of a 

22 foreign currency as a result of protracted large23 scale intervention by or at the direction of a 

24 governmental authority in the exchange market. 

25 Such undervaluation shall be found when the 


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1 observed exchange rate for a foreign currency is 

2 below the exchange rate that could reasonably 

3 be expected for that foreign currency absent the 

4 intervention. 

5 ‘‘(B) FACTORS.—In determining whether 

6 exchange-rate misalignment is occurring and a 

7 benefit thereby is conferred, the administering 

8 authority in each case— 

9 ‘‘(i) shall consider the exporting coun10 try’s— 

11 ‘‘(I) bilateral balance-of-trade 

12 surplus or deficit with the United 

13 States; 

14 ‘‘(II) balance-of-trade surplus or 

15 deficit with its other trading partners 

16 individually and in the aggregate; 

17 ‘‘(III) foreign direct investment 

18 in its territory; 

19 ‘‘(IV) currency-specific and ag20 gregate amounts of foreign currency 

21 reserves; and 

22 ‘‘(V) mechanisms employed to 

23 maintain its currency at an under24 valued exchange rate relative to an25 other currency and, particularly, the 


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1 nature, duration, and monetary ex2 penditures of those mechanisms; 

3 ‘‘(ii) may consider such other eco4 nomic factors as are relevant; and 

5 ‘‘(iii) shall measure the trade sur6 pluses or deficits described in subclauses 

7 (I) and (II) of clause (i) with reference to 

8 the trade data reported by the United 

9 States and the other trading partners of 

10 the exporting country, unless such trade 

11 data are not available or are demonstrably 

12 inaccurate, in which case the exporting 

13 country’s trade data may be relied upon if 

14 shown to be sufficiently accurate and 

15 trustworthy. 

16 ‘‘(C) COMPUTATION.—In quantifying ex17 change-rate misalignment, the administering 

18 authority shall develop and apply an objective 

19 methodology that is consistent with widely rec20 ognized macroeconomic theory and shall rely 

21 upon governmentally published and other pub22 licly available and reliable data. 

23 ‘‘(D) TYPE OF ECONOMY.—An authority 

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1 ment may have either a market economy or a 

2 nonmarket economy or a combination thereof.’’. 

3 (c) EFFECTIVE DATE.—The amendments made by 

4 this section apply with respect to a countervailing duty 

5 proceeding initiated under subtitle A of title VII of the 

6 Tariff Act of 1930 before, on, or after the date of enact7 ment of this Act. 

8 SEC. 104. CLARIFICATION TO INCLUDE EXCHANGE-RATE 

9 MISALIGNMENT BY THE PEOPLE’S REPUBLIC 

10 OF CHINA AS A CONDITION TO BE CONSID11 ERED WITH RESPECT TO MARKET DISRUP12 TION UNDER CHAPTER 2 OF TITLE IV OF THE 

13 TRADE ACT OF 1974. 

14 (a) MARKET DISRUPTION.— 

15 (1) IN GENERAL.—Section 421(c) of the Trade 

16 Act of 1974 (19 U.S.C. 2451(c)) is amended by add17 ing at the end the following new paragraphs: 

18 ‘‘(3) For purposes of this section, the term 

19 ‘under such conditions’ includes exchange-rate mis20 alignment (as defined in paragraph (4)). 

21 ‘‘(4)(A) For purposes of this section, the term 

22 ‘exchange-rate misalignment’ means an undervalu23 ation of the renminbi as a result of protracted large24 scale intervention by or at the direction of the Gov25 ernment of the People’s Republic of China in the exVerDate Aug 31 2005 16:49 Mar 10, 2007 Jkt 059196 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\S796.IS S796

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1 change market. Such undervaluation shall be found 

2 when the observed exchange rate for the renminbi is 

3 below the exchange rate that could reasonably be ex4 pected for the renminbi absent the intervention. 

5 ‘‘(B) In determining whether exchange-rate 

6 misalignment is occurring, the Commission in each 

7 case— 

8 ‘‘(i) shall consider the People’s Republic of 

9 China’s— 

10 ‘‘(I) bilateral balance-of-trade surplus 

11 or deficit with the United States; 

12 ‘‘(II) balance-of-trade surplus or def13 icit with its other trading partners individ14 ually and in the aggregate; 

15 ‘‘(III) foreign-direct investment in its 

16 territory; 

17 ‘‘(IV) currency-specific and aggregate 

18 amounts of foreign currency reserves; and 

19 ‘‘(V) mechanisms employed to main20 tain its currency at an undervalued ex21 change rate relative to another currency 

22 and, particularly, the nature, duration, and 

23 monetary expenditures of those mecha24 nisms; 


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1 ‘‘(ii) may consider such other economic 

2 factors as are relevant; and 

3 ‘‘(iii) shall measure the trade surpluses or 

4 deficits described in subclauses (I) and (II) of 

5 clause (i) with reference to the trade data re6 ported by the United States and the other trad7 ing partners of the People’s Republic of China, 

8 unless such trade data are not available or are 

9 demonstrably inaccurate, in which case the 

10 trade data of the People’s Republic of China 

11 may be relied upon if shown to be sufficiently 

12 accurate and trustworthy. 

13 ‘‘(C) COMPUTATION.—In quantifying exchange14 rate misalignment, the Commission shall develop and 

15 apply an objective methodology that is consistent 

16 with widely recognized macroeconomic theory and 

17 shall rely upon governmentally published and other 

18 publicly available and reliable data.’’. 

19 (b) CRITICAL CIRCUMSTANCES.—Section 421(i)(1) of 

20 the Trade Act of 1974 (19 U.S.C. 2451(i)(1)) is amended 

21 by inserting after subparagraph (B) the following: 

22 ‘‘If the petition alleges and reasonably documents that ex23 change-rate misalignment is occurring, such exchange-rate 

24 misalignment shall be considered as a factor weighing in 


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1 favor of affirmative findings in subparagraphs (A) and 

2 (B).’’. 

3 (c) STANDARD FOR PRESIDENTIAL ACTION.—Section 

4 421(k)(2) of the Trade Act of 1974 (19 U.S.C. 

5 2451(k)(2)) is amended by adding at the end the following 

6 new sentence: ‘‘If the Commission makes an affirmative 

7 determination that exchange-rate misalignment is occur8 ring, the President shall consider such exchange-rate mis9 alignment as a factor weighing in favor of providing im10 port relief in accordance with subsection (a).’’. 

11 (d) MODIFICATIONS OF RELIEF.—Section 421(n)(2) 

12 of the Trade Act of 1974 (19 U.S.C. 2451(n)(2)) is 

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

14 ‘‘If the Commission affirmatively determines that ex15 change-rate misalignment is occurring, the Commission 

16 and the President shall consider such exchange-rate mis17 alignment as a factor weighing in favor of finding that 

18 continuation of relief is necessary to prevent or remedy 

19 the market disruption at issue.’’. 

20 (e) EXTENSION OF ACTION.—Section 421(o) of the 

21 Trade Act of 1974 (19 U.S.C. 2451(o)) is amended— 

22 (1) in paragraph (1), by adding at the end the 

23 following new sentence: ‘‘If the Commission makes 

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1 sider such exchange-rate misalignment as a factor 

2 weighing in favor of finding that an extension of the 

3 period of relief is necessary to prevent or remedy the 

4 market disruption at issue.’’; and 

5 (2) in paragraph (4), by adding at the end the 

6 following new sentence: ‘‘If the Commission makes 

7 an affirmative determination that exchange-rate mis8 alignment is occurring, the President shall consider 

9 such exchange-rate misalignment as a factor weigh10 ing in favor of finding that an extension of the pe11 riod of relief is necessary to prevent or remedy the 

12 market disruption at issue.’’. 

13 (f) EFFECTIVE DATE.—The amendments made by 

14 this section apply with respect to an investigation initiated 

15 under chapter 2 of title IV of the Trade Act of 1974 be16 fore, on, or after the date of the enactment of this Act. 

17 SEC. 105. PROHIBITION ON PROCUREMENT BY THE DE18 PARTMENT OF DEFENSE OF CERTAIN DE19 FENSE ARTICLES IMPORTED FROM THE PEO20 PLE’S REPUBLIC OF CHINA. 

21 (a) COPY OF PETITION, REQUEST, OR RESOLUTION

22 TO BE TRANSMITTED TO THE SECRETARY OF DE23 FENSE.—Section 421(b)(4) of the Trade Act of 1974 (19 

24 U.S.C. 2451(b)(4)) is amended by inserting ‘‘, the Sec25 retary of Defense’’ after ‘‘, the Trade Representative’’. 


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1 (b) DETERMINATION OF SECRETARY OF DEFENSE.— 

2 Section 421(b) of the Trade Act of 1974 (19 U.S.C. 

3 2451(b)) is amended by adding at the end the following 

4 new paragraph: 

5 ‘‘(6) Not later than 15 days after the date on 

6 which an investigation is initiated under this sub7 section, the Secretary of Defense shall submit to the 

8 Commission a report in writing which contains the 

9 determination of the Secretary as to whether or not 

10 the articles of the People’s Republic of China that 

11 are the subject of the investigation are like or di12 rectly competitive with articles produced by a domes13 tic industry that are critical to the defense industrial 

14 base of the United States.’’. 

15 (c) PROHIBITION ON PROCUREMENT BY THE DE16 PARTMENT OF DEFENSE OF CERTAIN DEFENSE ARTI17 CLES.— 

18 (1) PROHIBITION.—If the United States Inter19 national Trade Commission makes an affirmative 

20 determination under section 421(b) of the Trade Act 

21 of 1974 (19 U.S.C. 2451(b)), or a determination 

22 which the President or the United States Trade 

23 Representative may consider as affirmative under 

24 section 421(e) of such Act (19 U.S.C. 2451(e)), with 

25 respect to articles of the People’s Republic of China 


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1 that the Secretary of Defense has determined are 

2 like or directly competitive with articles produced by 

3 a domestic industry that are critical to the defense 

4 industrial base of the United States, the Secretary 

5 of Defense may not procure, directly or indirectly, 

6 such articles of the People’s Republic of China. 

7 (2) WAIVER.—The President may waive the ap8 plication of the prohibition contained in paragraph 

9 (1) on a case-by-case basis if the President deter10 mines and certifies to Congress that it is in the na11 tional security interests of the United States to do 

12 so. 

13 SEC. 106. APPLICATION TO GOODS FROM CANADA AND 

14 MEXICO. 

15 Pursuant to article 1902 of the North American Free 

16 Trade Agreement and section 408 of the North American 

17 Free Trade Agreement Implementation Act of 1993 (19 

18 U.S.C. 3438), the amendments made by sections 102, 

19 103, and 206 of this Act shall apply to goods from Canada 

20 and Mexico. 

21 TITLE II—INTERNATIONAL MON22 ETARY AND FINANCIAL POL23 ICY 

24 SEC. 201. FINDINGS. 

25 Congress makes the following findings: 


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1 (1) Since the Exchange Rates and International 

2 Economic Policy Coordination Act of 1988 (22 

3 U.S.C. 5302(3)) was enacted the global economy has 

4 changed dramatically, with increased capital account 

5 openness, a sharp increase in the flow of funds 

6 internationally, and an ever growing number of 

7 emerging market economies becoming systemically 

8 important to the global flow of goods, services, and 

9 capital. In addition, practices such as the mainte10 nance of multiple currency regimes have become 

11 rare. 

12 (2) Exchange rates among major trading na13 tions are occasionally manipulated or fundamentally 

14 misaligned due to direct or indirect governmental 

15 intervention in the exchange market. 

16 (3) A major focus of national economic policy 

17 should be a market-driven exchange rate for the 

18 United States dollar at a level consistent with a sus19 tainable balance in the United States current ac20 count. 

21 (4) While some degree of surpluses and deficits 

22 in payments balances may be expected, particularly 

23 in response to increasing economic globalization, 

24 large and growing imbalances raise concerns of pos25 sible disruption to financial markets. In part, such 


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1 imbalances often reflect exchange rate policies that 

2 foster fundamental misalignment of currencies. 

3 (5) Currencies in fundamental misalignment 

4 can seriously impair the ability of international mar5 kets to adjust appropriately to global capital and 

6 trade flows, distorting trade flows and causing eco7 nomic harm to the United States. 

8 (6) The effects of a fundamentally misaligned 

9 currency may be so harmful that it is essential to 

10 correct the fundamental misalignment without re11 gard to the purpose of any policy that contributed 

12 to the misalignment. 

13 (7) In the interests of facilitating the exchange 

14 of goods, services, and capital among countries, sus15 taining sound economic growth, and fostering finan16 cial and economic stability, Article IV of the Inter17 national Monetary Fund’s Articles of Agreement ob18 ligates each member of the International Monetary 

19 Fund to avoid manipulating exchange rates in order 

20 to prevent effective balance of payments adjustments 

21 or to gain an unfair competitive advantage over 

22 other members. 

23 (8) The failure of a government to acknowledge 

24 a fundamental misalignment of its currency or to 

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1 damental misalignment, either through inaction or 

2 mere token action, is a form of exchange rate ma3 nipulation and is inconsistent with that govern4 ment’s obligations under Article IV of the Inter5 national Monetary Fund’s Articles of Agreement. 

6 SEC. 202. AMENDMENTS TO DEFINITIONS. 

7 Section 3006 of the Exchange Rates and Inter8 national Economic Policy Coordination Act of 1988 (22 

9 U.S.C. 5306) is amended by adding at the end the fol10 lowing: 

11 ‘‘(3) FUNDAMENTAL MISALIGNMENT.—The 

12 term ‘fundamental misalignment’ means a material 

13 sustained disparity between the observed levels of an 

14 effective exchange rate for a currency and the cor15 responding levels of an effective exchange rate for 

16 that currency that would be consistent with funda17 mental macroeconomic conditions based on a gen18 erally accepted economic rationale. 

19 ‘‘(4) EFFECTIVE EXCHANGE RATE.—The term 

20 ‘effective exchange rate’ means a weighted average 

21 of bilateral exchange rates, expressed in either nomi22 nal or real terms. 

23 ‘‘(5) GENERALLY ACCEPTED ECONOMIC RA24 TIONALE.—The term ‘generally accepted economic 

25 rationale’ means an explanation drawn on widely 


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1 recognized macroeconomic theory for which there is 

2 a significant degree of empirical support.’’. 

3 SEC. 203. BILATERAL NEGOTIATIONS. 

4 Section 3004(b) of the Exchange Rates and Inter5 national Economic Policy Coordination Act of 1988 (22 

6 U.S.C. 5304(b)) is amended to read as follows: 

7 ‘‘(b) BILATERAL NEGOTIATIONS.— 

8 ‘‘(1) IN GENERAL.—The Secretary of the 

9 Treasury shall analyze on an annual basis the ex10 change rate policies of foreign countries, in consulta11 tion with the International Monetary Fund, and con12 sider whether countries— 

13 ‘‘(A) manipulate the rate of exchange be14 tween their currency and the United States dol15 lar for purposes of preventing effective balance 

16 of payments adjustments or gaining unfair com17 petitive advantage in international trade; or 

18 ‘‘(B) have a currency that is in funda19 mental misalignment. 

20 ‘‘(2) AFFIRMATIVE DETERMINATION.—If the 

21 Secretary considers that such manipulation or fun22 damental misalignment is occurring with respect to 

23 countries that— 

24 ‘‘(A) have material global current account 

25 surpluses; or 


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1 ‘‘(B) have significant bilateral trade sur2 pluses with the United States, 

3 the Secretary of the Treasury shall take action to 

4 initiate negotiations with such foreign countries on 

5 an expedited basis, in the International Monetary 

6 Fund or bilaterally, for the purpose of ensuring that 

7 such countries regularly and promptly adjust the 

8 rate of exchange between their currencies and the 

9 United States dollar to permit effective balance of 

10 payments adjustments and to eliminate the unfair 

11 advantage. 

12 ‘‘(3) EXCEPTION.—The Secretary shall not be 

13 required to initiate negotiations if the Secretary de14 termines that such negotiations would have a serious 

15 detrimental impact on vital national economic and 

16 security interests. The Secretary shall inform the 

17 chairman and the ranking minority member of the 

18 Committee on Banking, Housing, and Urban Affairs 

19 of the Senate and of the Committee on Financial 

20 Services of the House of Representatives of the Sec21 retary’s determination.’’. 

22 SEC. 204. REPORTING REQUIREMENTS. 

23 Section 3005 of the Exchange Rates and Inter24 national Economic Policy Coordination Act of 1988 (22 

25 U.S.C. 5305) is amended to read as follows: 


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1 ‘‘SEC. 3005. REPORTING REQUIREMENTS. 

2 ‘‘(a) REPORTS REQUIRED.— 

3 ‘‘(1) IN GENERAL.—The Secretary, after con4 sulting with the Chairman of the Board, shall sub5 mit to Congress, on or before October 15 of each 

6 year, a written report on international economic pol7 icy and currency exchange rates. 

8 ‘‘(2) INTERIM REPORT.—The Secretary, after 

9 consulting with the Chairman of the Board, shall 

10 submit to Congress, on or before April 15 of each 

11 year, a written report on interim developments with 

12 respect to international economic policy and cur13 rency exchange rates. 

14 ‘‘(b) CONTENTS OF REPORTS.—Each report sub15 mitted under subsection (a) shall contain— 

16 ‘‘(1) an analysis of currency market develop17 ments and the relationship between the United 

18 States dollar and the currencies of major economies 

19 and United States trading partners; 

20 ‘‘(2) a review of the economic and financial 

21 policies of major economies and United States trad22 ing partners and an evaluation of the impact that 

23 such policies have on currency exchange rates; 

24 ‘‘(3) a description of any currency intervention 

25 by the United States or other major economies or 

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1 dertaken to adjust the actual exchange rate of the 

2 dollar; 

3 ‘‘(4) an evaluation of the factors that underlie 

4 conditions in the currency markets, including— 

5 ‘‘(A) monetary and financial conditions; 

6 ‘‘(B) foreign exchange reserve accumula7 tion; 

8 ‘‘(C) macroeconomic trends; 

9 ‘‘(D) trends in current and financial ac10 count balances; 

11 ‘‘(E) the size and composition of, and 

12 changes in, international capital flows; 

13 ‘‘(F) the impact of the external sector on 

14 economic changes; 

15 ‘‘(G) the size and growth of external in16 debtedness; 

17 ‘‘(H) trends in the net level of inter18 national investment; and 

19 ‘‘(I) capital controls, trade, and exchange 

20 restrictions; 

21 ‘‘(5) a list of currencies of the major economies 

22 or economic areas that are manipulated or in funda23 mental misalignment and a description of any eco24 nomic models or methodologies used to establish the 

25 list; 


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1 ‘‘(6) a description of any reason or cir2 cumstance that accounts for why each currency iden3 tified under paragraph (5) is manipulated or in fun4 damental misalignment based on a generally accept5 ed economic rationale; 

6 ‘‘(7) a list of each currency identified under 

7 paragraph (5) for which the manipulation or funda8 mental misalignment causes, or contributes to, a 

9 material adverse impact on the economy of the 

10 United States, including a description of any reason 

11 or circumstance that explains why the manipulation 

12 or fundamental misalignment is not accounted for 

13 under paragraph (6); 

14 ‘‘(8) the results of any prior consultations con15 ducted or other steps taken; and 

16 ‘‘(9)(A) a list of each occasion during the re17 porting period when the issue of exchange-rate mis18 alignment was raised in a countervailing duty pro19 ceeding under subtitle A of title VII of the Tariff 

20 Act of 1930 or in an investigation under section 421 

21 of the Trade Act of 1974; 

22 ‘‘(B) a summary in each such instance of 

23 whether or not exchange-rate misalignment was 

24 found and the reasoning and data underlying that 

25 finding; and 


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1 ‘‘(C) a discussion regarding each affirmative 

2 finding of exchange-rate misalignment to consider 

3 the circumstances underlying that exchange-rate 

4 misalignment and what action appropriately has 

5 been or might be taken by the Secretary apart from 

6 and in addition to import relief to correct the ex7 change-rate misalignment. 

8 ‘‘(c) DEVELOPMENT OF REPORTS.—The Secretary 

9 shall consult with the Chairman of the Board with respect 

10 to the preparation of each report required under sub11 section (a). Any comments provided by the Chairman of 

12 the Board shall be submitted to the Secretary not later 

13 than the date that is 15 days before the date each report 

14 is due under subsection (a). The Secretary shall submit 

15 the report after taking into account all comments re16 ceived.’’. 

17 SEC. 205. INTERNATIONAL FINANCIAL INSTITUTION GOV18 ERNANCE ARRANGEMENTS. 

19 (a) INITIAL REVIEW.—Notwithstanding any other 

20 provision of law, before the United States approves a pro21 posed change in the governance arrangement of any inter22 national financial institution, as defined in section 

23 1701(c)(2) of the International Financial Institutions Act 

24 (22 U.S.C. 262r(c)(2)), the Secretary of the Treasury 

25 shall determine whether any member of the international 


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1 financial institution that would benefit from the proposed 

2 change, in the form of increased voting shares or represen3 tation, has a currency that is manipulated or in funda4 mental misalignment, and if so, whether the manipulation 

5 or fundamental misalignment causes or contributes to a 

6 material adverse impact on the economy of the United 

7 States. The determination shall be reported to Congress. 

8 (b) SUBSEQUENT ACTION.—The United States shall 

9 oppose any proposed change in the governance arrange10 ment of any international financial institution (as defined 

11 in subsection (a)) if the Secretary renders an affirmative 

12 determination pursuant to subsection (a). 

13 (c) FURTHER ACTION.—The United States shall con14 tinue to oppose any proposed change in the governance 

15 arrangement of an international financial institution, pur16 suant to subsection (b), until the Secretary determines 

17 and reports to Congress that the currency of each member 

18 of the international financial institution that would benefit 

19 from the proposed change, in the form of increased voting 

20 shares or representation, is neither manipulated nor in 

21 fundamental misalignment. 

22 SEC. 206. NONMARKET ECONOMY STATUS. 

23 Paragraph (18)(B)(vi) of section 771 of the Tariff 

24 Act of 1930 (19 U.S.C. 1677(18)(B)(vi)) is amended by 

25 inserting before the period at the end the following: ‘‘, inVerDate Aug 31 2005 16:49 Mar 10, 2007 Jkt 059196 PO 00000 Frm 00027 Fmt 6652 Sfmt 6201 E:\BILLS\S796.IS S796

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1 cluding whether the currency of the foreign country has 

2 been identified pursuant to section 3005(b)(7) of the Ex3 change Rates and International Economic Policy Coordi4 nation Act of 1988 (22 U.S.C. 5305(b)(7)) in any written 

5 report required by such section 3005(b)(7) during the 24- 

6 month period immediately preceding the month during 

7 which the administering authority seeks to revoke a deter8 mination that such foreign country is a nonmarket econ9 omy country’’. 

Æ 


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