II 

108TH CONGRESS 

1ST SESSION S. 1758

To require the Secretary of the Treasury to analyze and report on the 

exchange rate policies of the People’s Republic of China, and to require 

that additional tariffs be imposed on products of that country on the 

basis of the rate of manipulation by that country of the rate of exchange 

between the currency of that country and the United States dollar. 

IN THE SENATE OF THE UNITED STATES 

OCTOBER 20, 2003

Mr. VOINOVICH (for himself and Mr. DEWINE) introduced the following bill; 

which was read twice and referred to the Committee on Finance 

A BILL

To require the Secretary of the Treasury to analyze and 

report on the exchange rate policies of the People’s Republic of China, and to require that additional tariffs 

be imposed on products of that country on the basis 

of the rate of manipulation by that country of the rate 

of exchange between the currency of that country and 

the United States dollar.

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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•S 1758 IS 

1 SECTION 1. SHORT TITLE. 

2 This Act may be cited as the ‘‘Currency Harmoni3 zation Initiative through Neutralizing Action Act of 

4 2003’’. 

5 SEC. 2. FINDINGS. 

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

7 (1) The benefit of trade concessions can be ad8 versely affected by misalignments in currency. 

9 (2) Misalignments in currency caused by gov10 ernment policies intended to maintain an unfair 

11 trade advantage nullify and impair trade conces12 sions. 

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

14 country is considered to be manipulating its cur15 rency to obtain an unfair trade advantage if—

16 (A) its currency manipulation has a sub17 sidy-like effect; 

18 (B) its currency manipulation constitutes a 

19 nullification and impairment of the benefits of 

20 the GATT 1994; or 

21 (C) its currency manipulation results in a 

22 contravention of the intention of the GATT 

23 1994. 

24 (4) The International Monetary Fund also pro25 hibits the use of currency manipulation as a method 

26 of gaining unfair trade advantage. The International 
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1 Monetary Fund defines such manipulation as large2 scale and protracted intervention in one direction to 

3 gain an unfair trade advantage. 

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

5 of 1974 contain the authority under United States 

6 law to take retaliatory action, including import re7 strictions, to enforce the rights of the United States 

8 against any unjustifiable, unreasonable, or discrimi9 natory practice or policy of a country that burdens 

10 or restricts United States commerce. 

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

12 with the People’s Republic of China exceeded 

13 $103,000,000,000, the largest bilateral trade deficit 

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

15 2003, the United States trade deficit with the Peo16 ple’s Republic of China is estimated to reach more 

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

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

19 Republic of China have been growing at more than 

20 twice the rate of United States exports to that coun21 try. 

22 (8) The People’s Republic of China is accumu23 lating foreign currency reserves, mostly United 

24 States dollars, at a rate of more than 

25 $6,000,000,000 per month; this intervention has 
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•S 1758 IS 

1 kept the Chinese renminbi (RMB) from appreciating 

2 despite large trade surpluses and investment flows. 

3 China’s total foreign currency reserves currently 

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

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

6 currency pegged at approximately 8.3 RMB to the 

7 dollar since 1994. 

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

9 People’s Republic of China with the United States 

10 strongly suggests that the RMB is undervalued 

11 against the dollar. Recently, economists have esti12 mated that the RMB is undervalued against the 

13 United States dollar by as much as 40 percent. 

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

15 China currently average about 15 percent. Assuming 

16 the recent estimates of Chinese RMB undervaluation 

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

18 and open currency market would be more than twice 

19 as large as the effect of eliminating every tariff that 

20 the People’s Republic of China imposes on United 

21 States goods. 

22 (12) In the long run, revaluation of the RMB 

23 by the Government of the People’s Republic of 

24 China would mitigate the ever increasing United 

25 States trade deficit with that country. 
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1 (13) The President should formally initiate ac2 tion against the People’s Republic of China, on ac3 count of the manipulation of its currency, pursuant 

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

5 International Monetary Fund, and sections 301 

6 through 309 of the Trade Act of 1974. 

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

8 1994’’ has the meaning given that term in section 2 of 

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

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

11 POLICIES OF CHINA. 

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

13 upon the enactment of this Act and annually thereafter, 

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

15 of China in order to determine whether that country ma16 nipulates the rate of exchange between the currency of 

17 that country and the United States dollar for purposes 

18 of preventing effective balance of payments adjustments 

19 or gaining an unfair competitive advantage in inter20 national trade. 

21 (b) COMPUTATION OF RATE OF MANIPULATION.—If 

22 the Secretary of the Treasury makes an affirmative deter23 mination under subsection (a), the Secretary shall com24 pute the rate of manipulation against the dollar in the 

25 form of a percentage. 
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•S 1758 IS 

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

2 Treasury shall submit to the Committee on Ways and 

3 Means of the House of Representatives and to the Com4 mittee on Finance of the Senate a report on the Sec5 retary’s analysis and findings under subsection (a), and 

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

7 be submitted—

8 (1) with respect to the analysis conducted upon 

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

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

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

12 the end of each 1-year period thereafter. 

13 SEC. 4. ADDITIONAL TARIFFS. 

14 (a) ADDITIONAL TARIFF.—In any case in which a re15 port of the Secretary of the Treasury submitted under sec16 tion 3(c) includes a rate of manipulation under section 

17 3(b), the Secretary shall, not later than 30 days after the 

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

19 enter the customs territory of the United States, in addi20 tion to any duty that otherwise applies, a tariff equal to 

21 the applicable percentage of the appraised value of the 

22 product at the time of entry. For purposes of this sub23 section, the ‘‘applicable percentage’’ is the percentage 

24 equal to the rate of manipulation. 
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•S 1758 IS 

1 (b) ANNUAL MODIFICATION.—Any tariff imposed 

2 under subsection (a) shall be modified annually to the ex3 tent necessary to comply with the most recent report of 

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

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