I 
109TH CONGRESS 
1ST SESSION H. R. 1498 
To clarify that exchange-rate manipulation by the People’s Republic of China 
is actionable under the countervailing duty provisions and the product- 
specific safeguard mechanisms of the trade laws of the United States, 
and for other purposes. 
IN THE HOUSE OF REPRESENTATIVES 
APRIL 6, 2005 
Mr. RYAN of Ohio (for himself and Mr. HUNTER) introduced the following bill; 
which was referred to the Committee on Ways and Means, and in addi-
tion to the Committee on Armed Services, for a period to be subsequently 
determined by the Speaker, in each case for consideration of such provi-
sions as fall within the jurisdiction of the committee concerned 
A BILL 
To clarify that exchange-rate manipulation by the People’s 
Republic of China is actionable under the countervailing 
duty provisions and the product-specific safeguard mech-
anisms of the trade laws of the United States, and 
for other purposes. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Chinese Currency Act 
of 2005’’.
SEC. 2. FINDINGS. 
Congress makes the following findings: 
(1) The economy and national security of the 
United States are critically dependent upon a vi-
brant manufacturing base. 
(2) The good health of the United States manu-
facturing industry requires, among other things, un-
fettered access to open markets abroad and fairly 
traded raw materials and products in accord with 
the international legal principles and agreements of 
the World Trade Organization and the International 
Monetary Fund. 
(3) Since 1994, the People’s Republic of China 
has aggressively intervened in currency markets to 
peg the Chinese currency, known as the renminbi or 
yuan, at a fixed rate of approximately 8.28 yuan to 
the United States dollar. 
(4) Economists generally agree that this policy 
by the People’s Republic of China has resulted in 
substantial undervaluation of the renminbi, perhaps 
by 40 percent or more. 
(5) Evidence of this undervaluation can be 
found in the large and growing annual trade sur-
pluses of the People’s Republic of China, foreign-di-
rect investment in China, and rapidly increasing ag-
gregate amount of foreign-currency reserves.
(6) The renminbi’s undervaluation acts as both 
a subsidy for exports from the People’s Republic of 
China and a non-tariff barrier against imports into 
China, to the serious detriment of the United States 
manufacturing industry. 
(7)(A) As a member of both the World Trade 
Organization and the International Monetary Fund, 
the People’s Republic of China has assumed a series 
of international legal obligations that proscribe sub-
sidization of exports and exchange-rate manipula-
tion. 
(B) These prohibitions are most prominently 
set forth in Articles VI, XV, and XVI of the GATT 
1994 (as defined in section 2(1)(B) of the Uruguay 
Round Agreements Act (19 U.S.C. 3501(1)(B)), in 
the Agreement on Subsidies and Countervailing 
Measures (as defined in section 101(d)(12) of the 
Uruguay 
Round 
Agreements 
Act 
(19 
U.S.C. 
3511(d)(12)), and in Articles IV and VIII of the 
International Monetary Fund’s Articles of Agree-
ment. 
(8) In addition, as a further condition of its ac-
cession agreement to become a member of the World 
Trade Organization on December 11, 2001, the Peo-
ple’s Republic of China agreed to a transitional
product-specific safeguard mechanism to address 
market disruption to an importing member’s domes-
tic industry due to increased imports of products of 
Chinese origin. 
(9) Despite its international legal obligations, 
and notwithstanding extended and ongoing negotia-
tions with the United States, the People’s Republic 
of China has given no indication of any intent to 
correct the renminbi’s undervaluation in the foresee-
able future. 
(10) Under the foregoing circumstances, it is 
consistent with the international legal obligations of 
the People’s Republic of China and with the cor-
responding international legal rights of the United 
States to amend relevant United States trade laws 
to make explicit that exchange-rate manipulation is 
actionable as either or both a countervailable export 
subsidy and as a cause of present or threatened 
market disruption to United States domestic pro-
ducers.
SEC. 3. CLARIFICATION TO INCLUDE EXCHANGE-RATE MA-
NIPULATION AS COUNTERVAILABLE SUBSIDY 
UNDER TITLE VII OF THE TARIFF ACT OF 
1930. 
(a) 
AMENDMENTS
TO
DEFINITION
OF 
COUNTERVAILABLE SUBSIDY.— 
(1) 
FINANCIAL
CONTRIBUTION.—Section 
771(5)(D) of the Tariff Act of 1930 (19 U.S.C. 
1677(5)(D)) is amended— 
(A) by striking ‘‘The term’’ and inserting 
‘‘(i) The term’’; 
(B) by redesignating clauses (i) through 
(iv) as subclauses (I) through (IV), respectively; 
and 
(C) by adding at the end the following: 
‘‘(ii) In addition to clause (i), the term 
‘provides a financial contribution’ means to en-
gage in exchange-rate manipulation (as defined 
in paragraph (5C)).’’. 
(2) BENEFIT CONFERRED.—Section 771(5)(E) 
of the Tariff Act of 1930 (19 U.S.C. 1677(5)(E)) is 
amended— 
(A) in clause (iii), by striking ‘‘, and’’ and 
inserting a comma; 
(B) in clause (iv), by striking the period at 
the end and inserting ‘‘, and’’; and
(C) by adding at the end the following new 
clause: 
‘‘(v) in the case of exchange-rate ma-
nipulation (as defined in paragraph (5C)), 
if the price of exported goods is less than 
what the price of such goods would be ab-
sent the exchange-rate manipulation.’’. 
(3) 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 before the period the 
following: ‘‘, such as exchange-rate manipulation (as 
defined in paragraph (5C))’’. 
(b) DEFINITION
OF EXCHANGE-RATE MANIPULA-
TION.—Section 771 of the Tariff Act of 1930 (19 U.S.C. 
1677) is amended by inserting after paragraph (5B) the 
following new paragraph: 
‘‘(5C) DEFINITION OF EXCHANGE-RATE MANIP-
ULATION.— 
‘‘(A) IN GENERAL.—For purposes of para-
graphs (5) and (5A), the term ‘exchange-rate 
manipulation’ 
means 
protracted 
large-scale 
intervention by an authority to undervalue its 
currency in the exchange market that prevents 
effective balance-of-payments adjustment or
that gains an unfair competitive advantage over 
any other country. 
‘‘(B) FACTORS.—In determining whether 
exchange-rate manipulation is occurring and a 
benefit thereby conferred, the administering au-
thority in each case— 
‘‘(i) shall consider the exporting coun-
try’s— 
‘‘(I) 
bilateral 
balance-of-trade 
surplus or deficit with the United 
States; 
‘‘(II) balance-of-trade surplus or 
deficit with its other trading partners 
individually and in the aggregate; 
‘‘(III) foreign direct investment 
in its territory; 
‘‘(IV) currency-specific and ag-
gregate amounts of foreign currency 
reserves; and 
‘‘(V) mechanisms employed to 
maintain its currency at a fixed ex-
change rate relative to another cur-
rency and, particularly, the nature, 
duration, and monetary expenditures 
of those mechanisms;
‘‘(ii) may consider such other eco-
nomic factors as are relevant; and 
‘‘(iii) shall measure the trade sur-
pluses or deficits described in subclauses 
(I) and (II) of clause (i) with reference to 
the trade data reported by the United 
States and the other trading partners of 
the exporting country, unless such trade 
data are not available or are demonstrably 
inaccurate, in which case the exporting 
country’s trade data may be relied upon if 
shown to be sufficiently accurate and 
trustworthy. 
‘‘(C) TYPE
OF
ECONOMY.—An authority 
found to be engaged in exchange-rate manipula-
tion may have either a market economy or a 
nonmarket economy or a combination thereof.’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section apply with respect to a countervailing duty 
investigation initiated under subtitle A of title VII of the 
Tariff Act of 1930 before, on, or after the date of the 
enactment of this Act.
SEC. 4. CLARIFICATION TO INCLUDE EXCHANGE-RATE MA-
NIPULATION BY THE PEOPLE’S REPUBLIC OF 
CHINA 
AS 
MARKET 
DISRUPTION 
UNDER 
CHAPTER 2 OF TITLE IV OF THE TRADE ACT 
OF 1974. 
(a) MARKET DISRUPTION.— 
(1) IN GENERAL.—Section 421(c) of the Trade 
Act of 1974 (19 U.S.C. 2451(c)) is amended by add-
ing at the end the following new paragraph: 
‘‘(3) For purposes of this section, the term ‘under 
such conditions’ includes, but is not limited to, by reason 
of exchange-rate manipulation (as defined in paragraph 
(4)).’’. 
(2) DEFINITION OF EXCHANGE-RATE MANIPU-
LATION.—Section 421(c) of the Trade Act of 1974 
(19 U.S.C. 2451(c)), as amended by paragraph (1), 
is further amended by adding at the end the fol-
lowing new paragraph: 
‘‘(4)(A) For purposes of this section, the term ‘ex-
change-rate manipulation’ means protracted large-scale 
intervention by the Government of the People’s Republic 
of China or any other public entity within the territory 
of the People’s Republic of China to undervalue its cur-
rency in the exchange market that prevents effective bal-
ance-of-payments adjustment or that gains an unfair com-
petitive advantage over the United States.
‘‘(B) In determining whether exchange-rate manipu-
lation is occurring, the Commission in each case— 
‘‘(i) shall consider China’s— 
‘‘(I) bilateral balance-of-trade surplus or 
deficit with the United States; 
‘‘(II) balance-of-trade surplus or deficit 
with its other trading partners individually and 
in the aggregate; 
‘‘(III) foreign direct investment in its terri-
tory; 
‘‘(IV) 
currency-specific 
and 
aggregate 
amounts of foreign currency reserves; and 
‘‘(V) mechanisms employed to maintain its 
currency at a fixed exchange rate relative to an-
other currency and, particularly, the nature, du-
ration, and monetary expenditures of those 
mechanisms; 
‘‘(ii) may consider such other economic factors 
as are relevant; and 
‘‘(iii) shall measure the trade surpluses or defi-
cits described in subclauses (I) and (II) of clause (i) 
with reference to the trade data reported by the 
United States and the other trading partners of 
China, unless such trade data are not available or 
are demonstrably inaccurate, in which case China’s
trade data may be relied upon if shown to be suffi-
ciently accurate and trustworthy.’’. 
(b) CRITICAL CIRCUMSTANCES.—Section 421(i)(1) of 
the Trade Act of 1974 (19 U.S.C. 2451(i)(1)) is amend-
ed— 
(1) in subparagraph (A), by striking ‘‘and’’ at 
the end; 
(2) in subparagraph (B), by striking the period 
at the end and inserting ‘‘; and’’; and 
(3) by inserting after subparagraph (B) the fol-
lowing new subparagraph: 
‘‘(C) in those instances in which the petition al-
leges and reasonably documents that exchange-rate 
manipulation is occurring, shall consider that factor 
as weighing in favor of affirmative findings under 
subparagraphs (A) and (B).’’. 
(c) STANDARD FOR PRESIDENTIAL ACTION.—Section 
421(k)(2) of the Trade Act of 1974 (19 U.S.C. 
2451(k)(2)) is amended by adding at the end the following 
new sentence: ‘‘In those instances in which the Commis-
sion has made an affirmative determination that ex-
change-rate manipulation is occurring, the President shall 
consider that factor as weighing in favor of providing im-
port relief in accordance with subsection (a).’’.
(d) MODIFICATIONS OF RELIEF.—Section 421(n)(2) 
of the Trade Act of 1974 (19 U.S.C. 2451(n)(2)) is 
amended by adding at the end the following new sentence: 
‘‘In those instances in which the Commission has made 
an affirmative determination that exchange-rate manipu-
lation is occurring, the Commission and the President 
shall consider that factor as weighing in favor of finding 
that continuation of relief is necessary to prevent or rem-
edy the market disruption at issue.’’. 
(e) EXTENSION OF ACTION.—Section 421(o) of the 
Trade Act of 1974 (19 U.S.C. 2451(o)) is amended— 
(1) in paragraph (1), by adding at the end the 
following new sentence: ‘‘In those instances in which 
the Commission has made an affirmative determina-
tion that exchange-rate manipulation is occurring, 
the Commission shall consider that factor as weigh-
ing in favor of finding that an extension of the pe-
riod of relief is necessary to prevent or remedy the 
market disruption at issue.’’; and 
(2) in paragraph (4), by adding at the end the 
following new sentence: ‘‘In those instances in which 
the Commission has made an affirmative determina-
tion that exchange-rate manipulation is occurring, 
the President shall consider that factor as weighing 
in favor of finding that an extension of the period
of relief is necessary to prevent or remedy the mar-
ket disruption at issue.’’. 
(f) EFFECTIVE DATE.—The amendments made by 
this section apply with respect to an investigation initiated 
under chapter 2 of title IV of the Trade Act of 1974 be-
fore, on, or after the date of the enactment of this Act. 
SEC. 5. PROHIBITION ON PROCUREMENT BY THE DEPART-
MENT OF DEFENSE OF CERTAIN DEFENSE 
ARTICLES IMPORTED FROM THE PEOPLE’S 
REPUBLIC OF CHINA. 
(a) COPY OF PETITION, REQUEST, OR RESOLUTION 
TO BE TRANSMITTED
TO
THE SECRETARY
OF DE-
FENSE.—Section 421(b)(4) of the Trade Act of 1974 (19 
U.S.C. 2451(b)(4)) is amended by inserting ‘‘, the Sec-
retary of Defense’’ after ‘‘, the Trade Representative’’. 
(b) DETERMINATION OF SECRETARY OF DEFENSE.— 
Section 421(b) of the Trade Act of 1974 (19 U.S.C. 
2451(b)) is amended by adding at the end the following 
new paragraph: 
‘‘(6) Not later than 15 days after the date on which 
an investigation is initiated under this subsection, the Sec-
retary of Defense shall submit to the Commission a report 
in writing which contains the determination of the Sec-
retary as to whether or not the articles of the People’s 
Republic of China that are the subject of the investigation
are like or directly competitive with articles produced by 
a domestic industry that are critical to the defense indus-
trial base of the United States.’’. 
(c) PROHIBITION ON PROCUREMENT BY THE DE-
PARTMENT OF DEFENSE OF CERTAIN DEFENSE ARTI-
CLES.— 
(1) PROHIBITION.—If the United States Inter-
national Trade Commission makes an affirmative 
determination under section 421(b) of the Trade Act 
of 1974 (19 U.S.C. 2451(b)), or a determination 
which the President or the United States Trade 
Representative may consider as affirmative under 
section 421(e) of such Act (19 U.S.C. 2451(e)), with 
respect to articles of the People’s Republic of China 
that the Secretary of Defense has determined are 
like or directly competitive with articles produced by 
a domestic industry that are critical to the defense 
industrial base of the United States, the Secretary 
of Defense may not procure, directly or indirectly, 
such products of the People’s Republic of China. 
(2) WAIVER.—The President may waive the ap-
plication of the prohibition contained in paragraph 
(1) on a case-by-case basis if the President deter-
mines and certifies to Congress that it is in the na-
tional security interests of the United States to do 
so. 
Æ