```

[Congressional Bills 111th Congress]
[From the U.S. Government Publishing Office]
[S. 1027 Introduced in Senate (IS)]

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.

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Currency Reform for Fair Trade Act 
of 2009''.

SEC. 2. FINDINGS.

    Congress makes the following findings:
            (1) The strength, vitality, and stability of the United 
        States economy and, more broadly, the openness and 
        effectiveness of the global trading system are critically 
        dependent upon an international monetary regime of orderly and 
        flexible exchange rates.
            (2) Increasingly in recent years, a number of foreign 
        governments have undervalued their currencies by means of 
        protracted, large-scale intervention directly or indirectly 
        through surrogates in foreign exchange markets, and this 
        fundamental misalignment has substantially contributed to 
        distortions in trade flows, unsustainable current account 
        imbalances, and serious competitive problems for countries like 
        the United States that permit their currencies to fluctuate in 
        response to changes in market forces.
            (3) This exchange depreciation serves as a subsidy for, and 
        facilitates dumping of, exports from countries that engage in 
        this mercantilist practice.
            (4) It is consistent with the agreements of the World Trade 
        Organization and the International Monetary Fund that United 
        States trade law be amended to clarify and make explicit that 
        fundamental undervaluation by an exporting country of its 
        currency is actionable as a countervailable export subsidy and 
        alternatively can be offset by antidumping duties when injury 
        to producers and workers in the United States is caused by such 
        subsidized and dumped imports.

SEC. 3. FUNDAMENTAL AND ACTIONABLE MISALIGNMENT OF A CURRENCY.

    (a) In General.--Subtitle D of title VII of the Tariff Act of 1930 
(19 U.S.C. 1677 et seq.) is amended by inserting after section 771B the 
following new section:

``SEC. 771C. FUNDAMENTAL AND ACTIONABLE MISALIGNMENT OF A CURRENCY.

    ``(a) Fundamental and Actionable Undervaluation of a Currency.--For 
purposes of subsection (c), the currency of an exporting country is 
fundamentally and actionably undervalued if--
            ``(1) the real effective exchange rate of the exporting 
        country's currency is undervalued by at least 5 percent, on 
        average, during an 18-month period that represents the most 
        recent 18 months for which the information required under 
        subsection (c) is reasonably available, but that does not 
        include any time later than the final month in the period of 
        investigation or the period of review, as applicable;
            ``(2) during part or all of the 18-month period, the 
        government of the exporting country has engaged directly or 
        indirectly through surrogates in protracted, large-scale 
        intervention in foreign exchange markets, and that intervention 
        has involved the direct transfer of funds or the potential 
        direct transfer of funds or liabilities;
            ``(3) during part or all of the 18-month period, the 
        exporting country has experienced a significant and prolonged 
        global current account surplus;
            ``(4) during part or all of the 18-month period, the 
        exporting country has experienced a significant and prolonged 
        bilateral current account surplus with the United States; and
            ``(5) during part or all of the 18-month period, the 
        foreign exchange reserves held or controlled by the government 
        of the exporting country have exceeded the amount necessary to 
        repay its external debt obligations falling due within the 
        coming 12 months, except that the requirement of this paragraph 
        shall not be satisfied and no fundamental and actionable 
        undervaluation shall be found as to the currency of an 
        exporting country if the exporting country during any part of 
        the 18-month period has been allowed under article XII or 
        article XVIII, section B of the GATT 1994 (as defined in 
        section 2(1)(B) of the Uruguay Round Agreements Act (19 U.S.C. 
        3501(1)(B)) to impose restrictions to safeguard its balance of 
        payments.
    ``(b) Fundamental and Actionable Overvaluation of a Currency.--For 
purposes of subsection (c), the currency of an exporting country is 
fundamentally and actionably overvalued if--
            ``(1) the real effective exchange rate of the exporting 
        country's currency is overvalued by at least 5 percent, on 
        average, during an 18-month period that represents the most 
        recent 18 months for which the information required under 
        subsection (c) is reasonably available, but that does not 
        include any time later than the final month in the period of 
        investigation or the period of review, as applicable;
            ``(2) during part or all of the 18-month period, the 
        government of the exporting country has engaged directly or 
        indirectly through surrogates in protracted, large-scale 
        intervention in foreign exchange markets, and that intervention 
        has involved the direct transfer of funds or the potential 
        direct transfer of funds or liabilities;
            ``(3) during part or all of the 18-month period, the 
        exporting country has experienced a significant and prolonged 
        global current account deficit;
            ``(4) during part or all of the 18-month period, the 
        exporting country has experienced a significant and prolonged 
        bilateral current account deficit with the United States; and
            ``(5) during part or all of the 18-month period, the 
        foreign exchange reserves held or controlled by the government 
        of the exporting country have been less than the amount 
        necessary to repay its external debt obligations falling due 
        within the coming 12 months, except that the requirement of 
        this paragraph shall not be satisfied and no fundamental and 
        actionable overvaluation shall be found as to the currency of 
        an exporting country if the exporting country during any part 
        of the 18-month period has been allowed under article XII or 
        article XVIII, section B of the GATT 1994 (as defined in 
        section 2(1)(B) of the Uruguay Round Agreements Act (19 U.S.C. 
        3501(1)(B)) to impose restrictions to safeguard its balance of 
        payments.
    ``(c) Identification of Fundamental and Actionable Misalignment of 
a Currency.--In calculating under subsection (a) or (b) whether the 
currency of an exporting country was fundamentally and actionably 
misaligned during the applicable 18-month period described in such 
subsection, the administering authority shall--
            ``(1) measure the level of any such misalignment as the 
        simple average of the results yielded from application of the 
        macroeconomic-balance approach and the equilibrium-real-
        exchange-rate approach;
            ``(2) rely upon data that are publicly available, reliable, 
        and compiled and maintained by the International Monetary Fund 
        or the World Bank or, if the International Monetary Fund or the 
        World Bank cannot provide such data, by other international 
        organizations or by national governments;
            ``(3) for the purposes of the initiation and the 
        preliminary and final determinations of an investigation and 
        for purposes of the preliminary and final results of a review, 
        rely upon data for an 18-month period that represents the most 
        recent 18 months for which the information needed under this 
        subsection is reasonably available at the time, but that does 
        not include any time later than the final month in the period 
        of investigation or the period of review, as applicable;
            ``(4) use inflation-adjusted, trade-weighted exchange 
        rates;
            ``(5) implement the macroeconomic-balance approach and the 
        equilibrium-real-exchange-rate approach using the methodologies 
        described in the guidelines of the International Monetary 
        Fund's Consultative Group on Exchange Rate Issues, whenever 
        possible; and
            ``(6) in the event that the guidelines of the International 
        Monetary Fund's Consultative Group on Exchange Rate Issues are 
        not available, employ generally accepted economic and 
        econometric techniques to implement the macroeconomic-balance 
        approach and the equilibrium-real-exchange-rate approach.
    ``(d) Identification of Undervaluation or Overvaluation of a 
Currency During the Period of Investigation or the Period of Review.--
If fundamental and actionable misalignment within the meaning of 
subsection (a) or (b) is identified under subsection (c) as to an 
exporting country's currency for the applicable 18-month period 
described in subsection (a) or (b), the administering authority shall--
            ``(1) calculate for the period of investigation or the 
        period of review, as applicable, the level of undervaluation or 
        overvaluation, as the case may be, of the real effective 
        exchange rate of the exporting country's currency in accordance 
        with the procedures, methodologies, and standards set forth in 
        subsection (c);
            ``(2) calculate for the period of investigation or the 
        period of review, as applicable, using the results from each 
        approach described in subsection (c)(1), the level of 
        undervaluation or overvaluation, as the case may be, of the 
        real exchange rate between the exporting country and the United 
        States, deriving such level from each level of undervaluation 
        or overvaluation, as the case may be, of the real effective 
        exchange rate determined under paragraph (1) by allocating 
        appreciations or depreciations, as the case may be, in the 
        bilateral real exchange rates of the exporting country to its 
        trading partners on the basis of the overall current account 
        balances of such trading partners; and
            ``(3) take the simple average of each level of 
        undervaluation or overvaluation, as the case may be, calculated 
        under paragraph (2) to measure the level of undervaluation or 
        overvaluation, as the case may be, of the bilateral real 
        exchange rate between the exporting country and the United 
        States.
    ``(e) Consideration of Undervaluation of a Currency in 
Countervailing and Antidumping Duty Proceedings.--If the administering 
authority determines under subsection (d) that the currency of an 
exporting country was undervalued in relation to the United States 
dollar during the period of investigation or the period of review, as 
applicable--
            ``(1) in a countervailing duty proceeding, the 
        administering authority shall include in the net 
        countervailable subsidy the amount that reflects the level of 
        undervaluation determined under subsection (d)(3) in the 
        bilateral real exchange rate between the currency of the 
        exporting country and the United States dollar; and
            ``(2) in an antidumping duty proceeding, the administering 
        authority shall adjust the export price and constructed export 
        price downward by the amount that reflects the level of 
        undervaluation determined under subsection (d)(3) in the 
        bilateral real exchange rate between the currency of the 
        exporting country and the United States dollar.
    ``(f) Consideration of Overvaluation of a Currency in Antidumping 
Duty Proceedings.--If the administering authority determines under 
subsection (d) that the currency of an exporting country was overvalued 
in relation to the United States dollar during the period of 
investigation or the period of review, as applicable, the administering 
authority shall adjust the export price and constructed export price 
upward by the amount that reflects the level of overvaluation 
determined under subsection (d)(3) in the bilateral real exchange rate 
between the currency of the exporting country and the United States 
dollar.
    ``(g) Type of Economy.--Any determination with respect to the 
currency of an exporting country by the administering authority under 
this section shall be made regardless of whether the exporting country 
has a market economy, a nonmarket economy, or a combination thereof.
    ``(h) Definitions.--In this section:
            ``(1) Protracted, large-scale intervention in foreign 
        exchange markets.--
                    ``(A) In general.--The term `protracted, large-
                scale intervention in foreign exchange markets' means 
                involvement in foreign exchange markets by the 
                government of an exporting country, either directly or 
                indirectly through surrogates, in such a way as to 
                contribute significantly to fundamental and actionable 
                misalignment of the currency of the exporting country 
                within the meaning of subsection (a) or (b). Such 
                involvement may include one or more of the following:
                            ``(i) Governmental purchases, sales, or 
                        other exchanges of currencies in foreign 
                        exchange markets.
                            ``(ii) Requirement by law or policy of the 
                        government of the exporting country that some 
                        or all of the foreign currency earnings by an 
                        exporter or producer in the exporting country 
                        be converted into the currency of the exporting 
                        country.
                            ``(iii) Any other practice by the 
                        government of the exporting country that has 
                        the effect of causing fundamental and 
                        actionable misalignment of the exchange rate of 
                        the exporting country's currency and that 
                        involves the direct transfer of funds or the 
                        potential direct transfer of funds or 
                        liabilities.
                    ``(B) Rule of construction.--Fundamental and 
                actionable misalignment of the currency of an exporting 
                country within the meaning of subsection (a) or (b) 
                shall be attributed to the protracted, large-scale 
                intervention in foreign exchange markets by the 
                government of the exporting country unless it is 
                determined that such intervention was not a significant 
                cause of the fundamental and actionable misalignment.
            ``(2) Macroeconomic-balance approach.--The term 
        `macroeconomic-balance approach' means a methodology under 
        which the level of undervaluation or overvaluation of the real 
        effective exchange rate of the exporting country's currency is 
        defined as the change in the real effective exchange rate 
        needed to achieve equilibrium in the exporting country's 
        balance of payments.
            ``(3) Equilibrium-real-exchange-rate approach.--The term 
        `equilibrium-real-exchange-rate approach' means a methodology 
        under which the level of undervaluation or overvaluation of the 
        real effective exchange rate of the exporting country's 
        currency is defined as the difference between the observed real 
        effective exchange rate and the real effective exchange rate 
        predicted by an econometric model.''.
    (b) Clerical Amendment.--The table of contents of title VII of the 
Tariff Act of 1930 is amended by inserting after the item relating to 
section 771B the following new item:

``Sec. 771C. Fundamental and actionable misalignment of a currency.''.

SEC. 4. CLARIFICATIONS REGARDING DEFINITION OF COUNTERVAILABLE SUBSIDY.

    (a) Financial Contribution.--Section 771(5)(D) of the Tariff Act of 
1930 (19 U.S.C. 1677(5)(D)) is amended by adding at the end the 
following new flush sentence:
                ``A fundamentally and actionably undervalued currency 
                (as determined under section 771C) constitutes a 
                financial contribution under clause (i).''.
    (b) Benefit Conferred.--Section 771(5)(E) of the Tariff Act of 1930 
(19 U.S.C. 1677(5)(E)) is amended--
            (1) in clause (iii), by striking ``and'' at the end;
            (2) in clause (iv), by striking the period at the end and 
        inserting ``, and''; and
            (3) by inserting after clause (iv) the following new 
        clause:
                            ``(v) in the case of a fundamentally and 
                        actionably undervalued currency (as determined 
                        under section 771C), if the exporter or 
                        producer receives or is entitled to receive 
                        more of the exporting country's currency in 
                        exchange for the United States dollars paid for 
                        the subject merchandise than if the exporting 
                        country's currency were not fundamentally and 
                        actionably undervalued.''.
    (c) Specificity.--Section 771(5A)(B) of the Tariff Act of 1930 (19 
U.S.C. 1677(5A)(B)) is amended by adding at the end the following new 
sentence: ``For purposes of this subparagraph, a fundamentally and 
actionably undervalued currency (as determined under section 771C) 
constitutes an export subsidy.''.

SEC. 5. CLARIFICATIONS REGARDING DUMPING.

    (a) Adjustments for Export Price and Constructed Export Price.--
Section 772(c) of the Tariff Act of 1930 (19 U.S.C. 1677a(c)) is 
amended--
            (1) in paragraph (1)--
                    (A) in subparagraph (B) by striking ``and'' at the 
                end; and
                    (B) by adding at the end the following new 
                subparagraph:
                    ``(D) the amount that reflects the level of 
                overvaluation in the bilateral real exchange rate 
                between the exporting country and the United States (as 
                determined under section 771C), and''; and
            (2) in paragraph (2)--
                    (A) in subparagraph (A) by striking ``and'' at the 
                end;
                    (B) in subparagraph (B), by striking the period at 
                the end and inserting ``, and''; and
                    (C) by adding at the end the following new 
                subparagraph:
                    ``(C) the amount that reflects the level of 
                undervaluation in the bilateral real exchange rate 
                between the exporting country and the United States (as 
                determined under section 771C).''.
    (b) Amendments to Definition of Nonmarket Economy Country.--Section 
771(18)(B) of the Tariff Act of 1930 (19 U.S.C. 1677(18)(B)) is 
amended--
            (1) in clause (v), by striking ``and'' at the end;
            (2) by redesignating clause (vi) as clause (vii); and
            (3) by inserting after clause (v) the following new clause:
                            ``(vi) whether in the view of the 
                        administering authority the currency of the 
                        foreign country is fundamentally and actionably 
                        undervalued or fundamentally and actionably 
                        overvalued (as determined under section 771C), 
                        and''.

SEC. 6. APPLICATION TO GOODS FROM CANADA AND MEXICO.

    Pursuant to article 1902 of the North American Free Trade Agreement 
and section 408 of the North American Free Trade Agreement 
Implementation Act of 1993 (19 U.S.C. 3438), the amendments made by 
this Act shall apply with respect to goods from Canada and Mexico.

SEC. 7. EFFECTIVE DATE.

    The amendments made by this Act apply with respect to 
countervailing and antidumping duty proceedings initiated under title 
VII of the Tariff Act of 1930 before, on, or after the date of 
enactment of this Act.
                                 <all>
```