II 

111TH CONGRESS 

1ST SESSION S. 1027 

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 SENATE OF THE UNITED STATES 

MAY 13, 2009 

Ms. STABENOW (for herself, Mr. BUNNING, Mr. BROWN, Ms. SNOWE, and Mr. 

FEINGOLD) 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 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, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Currency Reform for 

5 Fair Trade Act of 2009’’. 

6 SEC. 2. FINDINGS. 

7 Congress makes the following findings: 

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

2 United States economy and, more broadly, the open3 ness and effectiveness of the global trading system 

4 are critically dependent upon an international mone5 tary regime of orderly and flexible exchange rates. 

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

7 foreign governments have undervalued their cur8 rencies by means of protracted, large-scale interven9 tion directly or indirectly through surrogates in for10 eign exchange markets, and this fundamental mis11 alignment has substantially contributed to distor12 tions in trade flows, unsustainable current account 

13 imbalances, and serious competitive problems for 

14 countries like the United States that permit their 

15 currencies to fluctuate in response to changes in 

16 market forces. 

17 (3) This exchange depreciation serves as a sub18 sidy for, and facilitates dumping of, exports from 

19 countries that engage in this mercantilist practice. 

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

21 World Trade Organization and the International 

22 Monetary Fund that United States trade law be 

23 amended to clarify and make explicit that funda24 mental undervaluation by an exporting country of its 

25 currency is actionable as a countervailable export 

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1 subsidy and alternatively can be offset by anti2 dumping duties when injury to producers and work3 ers in the United States is caused by such subsidized 

4 and dumped imports. 

5 SEC. 3. FUNDAMENTAL AND ACTIONABLE MISALIGNMENT 

6 OF A CURRENCY. 

7 (a) IN GENERAL.—Subtitle D of title VII of the Tar8 iff Act of 1930 (19 U.S.C. 1677 et seq.) is amended by 

9 inserting after section 771B the following new section: 

10 ‘‘SEC. 771C. FUNDAMENTAL AND ACTIONABLE MISALIGN11 MENT OF A CURRENCY. 

12 ‘‘(a) FUNDAMENTAL AND ACTIONABLE UNDERVALU13 ATION OF A CURRENCY.—For purposes of subsection (c), 

14 the currency of an exporting country is fundamentally and 

15 actionably undervalued if— 

16 ‘‘(1) the real effective exchange rate of the ex17 porting country’s currency is undervalued by at least 

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

19 that represents the most recent 18 months for which 

20 the information required under subsection (c) is rea21 sonably available, but that does not include any time 

22 later than the final month in the period of investiga23 tion or the period of review, as applicable; 

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

25 the government of the exporting country has enmstockstill on PROD1PC66 with BILLS

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1 gaged directly or indirectly through surrogates in 

2 protracted, large-scale intervention in foreign ex3 change markets, and that intervention has involved 

4 the direct transfer of funds or the potential direct 

5 transfer of funds or liabilities; 

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

7 the exporting country has experienced a significant 

8 and prolonged global current account surplus; 

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

10 the exporting country has experienced a significant 

11 and prolonged bilateral current account surplus with 

12 the United States; and 

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

14 the foreign exchange reserves held or controlled by 

15 the government of the exporting country have ex16 ceeded the amount necessary to repay its external 

17 debt obligations falling due within the coming 12 

18 months, except that the requirement of this para19 graph shall not be satisfied and no fundamental and 

20 actionable undervaluation shall be found as to the 

21 currency of an exporting country if the exporting 

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

23 been allowed under article XII or article XVIII, sec24 tion B of the GATT 1994 (as defined in section 

25 2(1)(B) of the Uruguay Round Agreements Act (19 

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1 U.S.C. 3501(1)(B)) to impose restrictions to safe2 guard its balance of payments. 

3 ‘‘(b) FUNDAMENTAL AND ACTIONABLE OVER4 VALUATION OF A CURRENCY.—For purposes of subsection 

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

6 and actionably overvalued if— 

7 ‘‘(1) the real effective exchange rate of the ex8 porting country’s currency is overvalued by at least 

9 5 percent, on average, during an 18-month period 

10 that represents the most recent 18 months for which 

11 the information required under subsection (c) is rea12 sonably available, but that does not include any time 

13 later than the final month in the period of investiga14 tion or the period of review, as applicable; 

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

16 the government of the exporting country has en17 gaged directly or indirectly through surrogates in 

18 protracted, large-scale intervention in foreign ex19 change markets, and that intervention has involved 

20 the direct transfer of funds or the potential direct 

21 transfer of funds or liabilities; 

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

23 the exporting country has experienced a significant 

24 and prolonged global current account deficit; 

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

2 the exporting country has experienced a significant 

3 and prolonged bilateral current account deficit with 

4 the United States; and 

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

6 the foreign exchange reserves held or controlled by 

7 the government of the exporting country have been 

8 less than the amount necessary to repay its external 

9 debt obligations falling due within the coming 12 

10 months, except that the requirement of this para11 graph shall not be satisfied and no fundamental and 

12 actionable overvaluation shall be found as to the cur13 rency of an exporting country if the exporting coun14 try during any part of the 18-month period has been 

15 allowed under article XII or article XVIII, section B 

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

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

18 3501(1)(B)) to impose restrictions to safeguard its 

19 balance of payments. 

20 ‘‘(c) IDENTIFICATION OF FUNDAMENTAL AND AC21 TIONABLE MISALIGNMENT OF A CURRENCY.—In calcu22 lating under subsection (a) or (b) whether the currency 

23 of an exporting country was fundamentally and actionably 

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1 scribed in such subsection, the administering authority 

2 shall— 

3 ‘‘(1) measure the level of any such misalign4 ment as the simple average of the results yielded 

5 from application of the macroeconomic-balance ap6 proach and the equilibrium-real-exchange-rate ap7 proach; 

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

9 reliable, and compiled and maintained by the Inter10 national Monetary Fund or the World Bank or, if 

11 the International Monetary Fund or the World Bank 

12 cannot provide such data, by other international or13 ganizations or by national governments; 

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

15 preliminary and final determinations of an investiga16 tion and for purposes of the preliminary and final 

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

18 period that represents the most recent 18 months 

19 for which the information needed under this sub20 section is reasonably available at the time, but that 

21 does not include any time later than the final month 

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

23 as applicable; 

24 ‘‘(4) use inflation-adjusted, trade-weighted ex25 change rates; 

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1 ‘‘(5) implement the macroeconomic-balance ap2 proach and the equilibrium-real-exchange-rate ap3 proach using the methodologies described in the 

4 guidelines of the International Monetary Fund’s 

5 Consultative Group on Exchange Rate Issues, when6 ever possible; and 

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

8 International Monetary Fund’s Consultative Group 

9 on Exchange Rate Issues are not available, employ 

10 generally accepted economic and econometric tech11 niques to implement the macroeconomic-balance ap12 proach and the equilibrium-real-exchange-rate ap13 proach. 

14 ‘‘(d) IDENTIFICATION OF UNDERVALUATION OR

15 OVERVALUATION OF A CURRENCY DURING THE PERIOD

16 OF INVESTIGATION OR THE PERIOD OF REVIEW.—If fun17 damental and actionable misalignment within the meaning 

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

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

20 18-month period described in subsection (a) or (b), the 

21 administering authority shall— 

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

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

24 undervaluation or overvaluation, as the case may be, 

25 of the real effective exchange rate of the exporting 

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1 country’s currency in accordance with the proce2 dures, methodologies, and standards set forth in 

3 subsection (c); 

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

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

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

7 the level of undervaluation or overvaluation, as the 

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

9 exporting country and the United States, deriving 

10 such level from each level of undervaluation or over11 valuation, as the case may be, of the real effective 

12 exchange rate determined under paragraph (1) by 

13 allocating appreciations or depreciations, as the case 

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

15 exporting country to its trading partners on the 

16 basis of the overall current account balances of such 

17 trading partners; and 

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

19 undervaluation or overvaluation, as the case may be, 

20 calculated under paragraph (2) to measure the level 

21 of undervaluation or overvaluation, as the case may 

22 be, of the bilateral real exchange rate between the 

23 exporting country and the United States. 

24 ‘‘(e) CONSIDERATION OF UNDERVALUATION OF A

25 CURRENCY IN COUNTERVAILING AND ANTIDUMPING

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1 DUTY PROCEEDINGS.—If the administering authority de2 termines under subsection (d) that the currency of an ex3 porting country was undervalued in relation to the United 

4 States dollar during the period of investigation or the pe5 riod of review, as applicable— 

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

7 administering authority shall include in the net 

8 countervailable subsidy the amount that reflects the 

9 level of undervaluation determined under subsection 

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

11 currency of the exporting country and the United 

12 States dollar; and 

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

14 administering authority shall adjust the export price 

15 and constructed export price downward by the 

16 amount that reflects the level of undervaluation de17 termined under subsection (d)(3) in the bilateral real 

18 exchange rate between the currency of the exporting 

19 country and the United States dollar. 

20 ‘‘(f) CONSIDERATION OF OVERVALUATION OF A CUR21 RENCY IN ANTIDUMPING DUTY PROCEEDINGS.—If the 

22 administering authority determines under subsection (d) 

23 that the currency of an exporting country was overvalued 

24 in relation to the United States dollar during the period 

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

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1 administering authority shall adjust the export price and 

2 constructed export price upward by the amount that re3 flects the level of overvaluation determined under sub4 section (d)(3) in the bilateral real exchange rate between 

5 the currency of the exporting country and the United 

6 States dollar. 

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

8 respect to the currency of an exporting country by the ad9 ministering authority under this section shall be made re10 gardless of whether the exporting country has a market 

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

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

13 ‘‘(1) PROTRACTED, LARGE-SCALE INTERVEN14 TION IN FOREIGN EXCHANGE MARKETS.— 

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

16 large-scale intervention in foreign exchange 

17 markets’ means involvement in foreign ex18 change markets by the government of an ex19 porting country, either directly or indirectly 

20 through surrogates, in such a way as to con21 tribute significantly to fundamental and action22 able misalignment of the currency of the export23 ing country within the meaning of subsection 

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

25 more of the following: 

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

2 other exchanges of currencies in foreign ex3 change markets. 

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

5 the government of the exporting country 

6 that some or all of the foreign currency 

7 earnings by an exporter or producer in the 

8 exporting country be converted into the 

9 currency of the exporting country. 

10 ‘‘(iii) Any other practice by the gov11 ernment of the exporting country that has 

12 the effect of causing fundamental and ac13 tionable misalignment of the exchange rate 

14 of the exporting country’s currency and 

15 that involves the direct transfer of funds or 

16 the potential direct transfer of funds or li17 abilities. 

18 ‘‘(B) RULE OF CONSTRUCTION.—Funda19 mental and actionable misalignment of the cur20 rency of an exporting country within the mean21 ing of subsection (a) or (b) shall be attributed 

22 to the protracted, large-scale intervention in 

23 foreign exchange markets by the government of 

24 the exporting country unless it is determined 

25 that such intervention was not a significant 

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1 cause of the fundamental and actionable mis2 alignment. 

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

4 The term ‘macroeconomic-balance approach’ means 

5 a methodology under which the level of undervalu6 ation or overvaluation of the real effective exchange 

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

8 the change in the real effective exchange rate needed 

9 to achieve equilibrium in the exporting country’s bal10 ance of payments. 

11 ‘‘(3) EQUILIBRIUM-REAL-EXCHANGE-RATE AP12 PROACH.—The term ‘equilibrium-real-exchange-rate 

13 approach’ means a methodology under which the 

14 level of undervaluation or overvaluation of the real 

15 effective exchange rate of the exporting country’s 

16 currency is defined as the difference between the ob17 served real effective exchange rate and the real ef18 fective exchange rate predicted by an econometric 

19 model.’’. 

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

21 of title VII of the Tariff Act of 1930 is amended by insert22 ing after the item relating to section 771B the following 

23 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 flush sen6 tence: 

7 ‘‘A fundamentally and actionably undervalued 

8 currency (as determined under section 771C) 

9 constitutes a financial contribution under clause 

10 (i).’’. 

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

12 the Tariff Act of 1930 (19 U.S.C. 1677(5)(E)) is amend13 ed— 

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

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

16 end and inserting ‘‘, and’’; and 

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

18 new clause: 

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

20 and actionably undervalued currency (as 

21 determined under section 771C), if the ex22 porter or producer receives or is entitled to 

23 receive more of the exporting country’s 

24 currency in exchange for the United States 

25 dollars paid for the subject merchandise 

26 than if the exporting country’s currency 

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1 were not fundamentally and actionably un2 dervalued.’’. 

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

4 Act of 1930 (19 U.S.C. 1677(5A)(B)) is amended by add5 ing at the end the following new sentence: ‘‘For purposes 

6 of this subparagraph, a fundamentally and actionably un7 dervalued currency (as determined under section 771C) 

8 constitutes an export subsidy.’’. 

9 SEC. 5. CLARIFICATIONS REGARDING DUMPING. 

10 (a) ADJUSTMENTS FOR EXPORT PRICE AND CON11 STRUCTED EXPORT PRICE.—Section 772(c) of the Tariff 

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

13 (1) in paragraph (1)— 

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

15 at the end; and 

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

17 subparagraph: 

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

19 overvaluation in the bilateral real exchange rate 

20 between the exporting country and the United 

21 States (as determined under section 771C), 

22 and’’; and 

23 (2) in paragraph (2)— 

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

25 at the end; 

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

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

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

4 subparagraph: 

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

6 undervaluation in the bilateral real exchange 

7 rate between the exporting country and the 

8 United States (as determined under section 

9 771C).’’. 

10 (b) AMENDMENTS TO DEFINITION OF NONMARKET

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

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

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

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

15 and 

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

17 new clause: 

18 ‘‘(vi) whether in the view of the ad19 ministering authority the currency of the 

20 foreign country is fundamentally and ac21 tionably undervalued or fundamentally and 

22 actionably overvalued (as determined under 

23 section 771C), and’’. 

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1 SEC. 6. APPLICATION TO GOODS FROM CANADA AND MEX2 ICO. 

3 Pursuant to article 1902 of the North American Free 

4 Trade Agreement and section 408 of the North American 

5 Free Trade Agreement Implementation Act of 1993 (19 

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

7 apply with respect to goods from Canada and Mexico. 

8 SEC. 7. EFFECTIVE DATE. 

9 The amendments made by this Act apply with respect 

10 to countervailing and antidumping duty proceedings initi11 ated under title VII of the Tariff Act of 1930 before, on, 

12 or after the date of enactment of this Act. 

Æ 

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