A bill to require negotiation and appropriate action with respect to certain countries that engage in currency manipulation.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Fair Currency Enforcement Act of 
2003''.

SEC. 2. FINDINGS.

    Congress makes the following findings:
            (1) The manufacturing sector is an important driver of the 
        United States economy, contributing almost 30 percent of our 
        economic growth during the 1990's, and twice the productivity 
        growth of the service sector during that period.
            (2) The manufacturing sector contributes significantly to 
        our Nation's development of new products and technologies for 
        world markets, performing almost 60 percent of all research and 
        development in the United States over the past two decades.
            (3) The manufacturing sector provides high quality jobs, 
        with average weekly wages in 2002 nearly 26 percent higher than 
        jobs in the service sector.
            (4) The manufacturing growth creates a significant number 
        of jobs and investments in other sectors of the economy, and 
        this ``multiplier effect'' is reckoned by economists to be 
        larger (2.43 to 1) than for any other significant sector of the 
        economy.
            (5) The ``jobless recovery'' from the recent recession has 
        witnessed the worst job slump since the Great Depression and 
        the weakest employment recovery on record.
            (6) The manufacturing sector has been hit the hardest by 
        the jobless recovery, with more than 2,700,000 jobs lost since 
        July 2000, accounting for nearly 90 percent of the total United 
        States jobs lost.
            (7) A significant factor in the loss of valuable United 
        States manufacturing jobs is the difficulty faced by United 
        States manufacturers in competing effectively against lower 
        priced foreign products.
            (8) A significant obstacle to United States manufacturers 
        in competing against foreign manufacturers is the practice of 
        some governments of intervening aggressively in currency 
        markets to maintain their own currencies at artificially low 
        valuations, thus subsidizing their export sales and raising 
        price barriers to imports from the United States.
            (9) Certain Asian countries exemplify this practice. China, 
        Japan, South Korea, and Taiwan together have accumulated 
        approximately $1,200,000,000,000 in foreign currency reserves, 
        about \1/2\ of the world's total reserves. The vast majority of 
        these reserves, perhaps as high as 90 percent, are in dollars. 
        These same 4 countries account for 60 percent of the United 
        States world trade deficit in manufactured goods. These 
        reserves are symptomatic of a strategy of intervention to 
        manipulate currency values.
            (10) The People's Republic of China is particularly 
        aggressive in intervening to maintain the value of its 
        currency, the renminbi, at an artificially low rate. China 
        maintains this rate by mandating foreign exchange sales at its 
        central bank at a fixed exchange rate against the dollar, in 
        effect, pegging the renminbi at this rate. This low rate 
        represents a significant reason why China has contributed the 
        most to our trade deficit in manufactured goods. The United 
        States trade deficit with China increased from $57,000,000,000 
        in 1998 to $103,000,000,000 in 2002, while China accumulated 
        dollar reserves totaling over $345,000,000,000 as of June 2003, 
        keeping the value of the renminbi essentially flat since 1994.
            (11) Economists estimate that as a result of this 
        manipulation of the Chinese currency, the renminbi is 
        undervalued by between 15 and 40 percent, effectively creating 
        a 15- to 40-percent subsidy for Chinese exports and giving 
        Chinese manufacturers a significant price advantage over United 
        States and other competitors.
            (12) Japan held foreign currency reserves worth 
        $526,600,000,000 as of June 2003, and for the previous 6 months 
        increased its reserves by an average of $12,500,000,000 per 
        month. Experts estimate that the yen is undervalued by 
        approximately 20 percent or more, giving Japanese manufacturers 
        a significant price advantage over United States competitors.
            (13) In addition to being placed at a competitive 
        disadvantage by foreign competitors' exports that are unfairly 
        subsidized by strategically undervalued currencies, United 
        States manufacturers also may face significant nontariff 
        barriers to their own exports to these same countries. For 
        example, in China a complex system involving that nation's 
        value added tax and special tax rebates ensures that 
        semiconductor devices imported into China are taxed at 17 
        percent while domestic devices are effectively taxed at 6 
        percent.
            (14) The United States has the right and power to redress 
        unfair competitive practices in international trade involving 
        currency manipulation.
            (15) Under section 3004 of the Omnibus Trade and 
        Competitiveness Act of 1988, the Secretary of the Treasury is 
        required to determine whether any country is manipulating the 
        rate of exchange between its currency and the dollar for the 
        purpose of preventing effective balance of payments adjustments 
        or gaining unfair advantage in international trade. If such 
        violations are found, the Secretary of the Treasury is required 
        to undertake negotiations with any country that has a 
significant trade surplus.
            (16) Article IV of the Articles of Agreement of the 
        International Monetary Fund prohibits currency manipulation by 
        a member for the purposes of gaining an unfair competitive 
        advantage over other members, and the related surveillance 
        provision defines ``manipulation'' to include ``protracted 
        large-scale intervention in one direction in the exchange 
        market''.
            (17) Under Article XV of the Exchange Agreements of the 
        General Agreement on Tariffs and Trade, all contracting parties 
        ``shall not, by exchange action, frustrate the intent of the 
        provisions of this Agreement, nor by trade action, the intent 
        of the Articles of Agreement of the International Monetary 
        Fund''. Such actions are actionable violations. The intent of 
        the General Agreement on Tariffs and Trade Exchange Agreement, 
        as stated in the preamble of that Agreement, includes the 
        objective of ``entering into reciprocal and mutually 
        advantageous arrangements directed to substantial reduction of 
        tariffs and other barriers to trade,'' and currency 
        manipulation may constitute a trade barrier disruptive to 
        reciprocal and mutually advantageous trade arrangements.
            (18) Deliberate currency manipulation by nations to 
        significantly undervalue their currencies also may be 
        interpreted as a violation of the Agreement on Subsidies and 
        Countervailing Measures of the World Trade Organization (as 
        described in section 101(d)(12)) of the Uruguay Round 
        Agreements Act, which could lead to action and remedy under the 
        World Trade Organization dispute settlement procedures.
            (19) Deliberate, large-scale intervention by governments in 
        currency markets to significantly undervalue their currencies 
        may be a nullification and impairment of trade benefits 
        precluded under Article XXIII of the General Agreement on 
        Tariffs and Trade, and subject to remedy.
            (20) The United States Trade Representative also has 
        authority to pursue remedial actions under section 301 of the 
        Trade Act of 1974.
            (21) The United States has special rights to take action to 
        redress market disruption under section 406 of the Trade Act of 
        1974 adopted pursuant to the provisions of the United States-
        China Bilateral Agreement on World Trade Organization 
        Accession.
            (22) While large-scale manipulation of currencies by 
        certain major trading partners to achieve an unfair competitive 
        advantage is one of the most pervasive barriers faces by the 
        manufacturing sector in the United States, other factors are 
        contributing to the decline of manufacturing and small and mid-
        sized manufacturing firms in the United States, including but 
        not limited to non-tariff trade barriers, lax enforcement of 
        existing trade agreements, and weak or under utilized 
        government support for trade promotion.

SEC. 3. NEGOTIATION PERIOD REGARDING CURRENCY NEGOTIATIONS.

    Beginning on the date of enactment of this Act, the President shall 
begin bilateral and multilateral negotiations for a 90-day period with 
those governments of nations determined to be engaged most egregiously 
in currency manipulation, as defined in section 7, to seek a prompt and 
orderly end to such currency manipulation and to ensure that the 
currencies of these countries are freely traded on international 
currency markets, or are established at a level that reflects a more 
appropriate and accurate market value. The President shall seek support 
in this process from international agencies and other nations and 
regions adversely affected by these currency practices.

SEC. 4. FINDINGS OF FACT AND REPORT REGARDING CURRENCY MANIPULATION.

    (a) In General.--During the 90-day negotiation period described in 
section 3, the International Trade Commission shall--
            (1) ascertain and develop the full facts and details 
        concerning how countries have acted to manipulate their 
        currencies to increase their exports to the United States and 
        limit their imports of United States products;
            (2) quantify the extent of this currency manipulation;
            (3) examine in detail how these currency practices have 
        affected and will continue to affect United States 
        manufacturers and United States trade levels, both for imports 
        and exports;
            (4) review whether and to what extent reduction of currency 
        manipulation and the accumulation of dollar-denominated 
        currency reserves and public debt instruments might adversely 
        affect United States interest rates and public debt financing;
            (5) make a determination of any and all available 
        mechanisms for redress under applicable international trade 
        treaties and agreements, including the Articles of Agreement of 
        the International Monetary Fund, the General Agreement on 
        Tariffs and Trade, the World Trade Organization Agreements, and 
        United States trade laws; and
            (6) undertake other appropriate evaluations of the issues 
        described in paragraphs (1) through (5).
    (b) Report.--Not later than 90 days after the date of enactment of 
this Act, the International Trade Commission shall provide a detailed 
report to the President, the United States Trade Representative, the 
Secretary of the Treasury, and the appropriate congressional committees 
on the findings made as a result of the reviews undertaken under 
paragraphs (1) through (6) of subsection (a).

SEC. 5. INSTITUTE PROCEEDINGS REGARDING CURRENCY MANIPULATION.

    At the end of the 90-day negotiation period provided for in section 
3, if agreements are not reached by the President to promptly end 
currency manipulation, the President shall institute proceedings under 
the relevant provisions of international law and United States trade 
laws including sections 301 and 406 of the Trade Act of 1974 with 
respect to those countries that, based on the findings of the 
International Trade Commission under section 4, continue to engage in 
the most egregious currency manipulation. In addition to seeking a 
prompt end to currency manipulation, the President shall seek 
appropriate damages and remedies for the Nation's manufacturers and 
other affected parties. If the President does not institute action, the 
President shall, not later than 120 days after the date of enactment of 
this Act, provide to the appropriate congressional committees a 
detailed explanation and accounting of precisely why the President has 
determined not to institute action.

SEC. 6. ADDITIONAL REPORTS AND RECOMMENDATIONS.

    (a) National Security.--Within 90 days of the date of enactment of 
this Act, the Secretary of Defense shall provide a detailed report to 
the appropriate congressional committees evaluating the effects on our 
national security of countries engaging in significant currency 
manipulations, and the effect of such manipulation on critical 
manufacturing sectors such as semiconductors.
    (b) Other Unfair Trade Practices.--Within 90 days of the date of 
enactment of this Act, the United States Trade Representative and the 
International Trade Commission shall evaluate and report in detail to 
the appropriate congressional committees on other trade practices and 
trade barriers by major East Asian trading nations potentially in 
violation of international trade agreements, including the practice of 
maintaining a value-added or other tax regime that effectively 
discriminates against imports by underpricing domestically produced 
goods.
    (c) Trade Enforcement.--Within 90 days of the date of enactment of 
this Act, the United States Trade Representative and the International 
Trade Commission shall report in detail to the appropriate 
congressional committees on steps that could be taken to significantly 
improve trade enforcement efforts against unfair trade practices by 
competitor trading nations, including making recommendations for 
additional support for trade enforcement efforts.
    (d) Trade Promotion.--Within 90 days of the date of enactment of 
this Act, the Secretaries of State and Commerce, and the United States 
Trade Representative, shall prepare a detailed report with 
recommendations on steps that could be undertaken to significantly 
improve trade promotion for United States goods and services, including 
recommendations on additional support to improve trade promotion.

SEC. 7. CURRENCY MANIPULATION DEFINED.

    In this Act, the term ``currency manipulation'' means--
            (1) large-scale manipulation of exchange rates by a nation 
        in order to gain an unfair competitive advantage as stated in 
        Article IV of the Articles of Agreement of the International 
        Monetary Fund and related surveillance provisions;
            (2) sustained, large-scale currency intervention in one 
        direction, through mandatory foreign exchange sales at a 
        nation's central bank at a fixed exchange rate; or
            (3) other mechanisms, used to maintain a currency at a 
        fixed exchange rate relative to another currency.

Summary: Fair Currency Enforcement Act of 2003 - Directs the President to: (1) begin bilateral and multilateral negotiations for a 90-day period with those governments of nations determined to be engaged most egregiously in currency manipulation; (2) seek a prompt and orderly end to such currency manipulation; and (3) ensure that the currencies of these countries are freely traded on international currency markets, or are established at a level that reflects a more appropriate and accurate market value.

Requires the International Trade Commission (ITC), during the 90-day negotiation period, to study and report to the President, the U.S. Trade Representative (USTR), the Secretary of the Treasury, and the appropriate congressional committees on currency manipulation by trading countries to increase their exports to the United States and limit their imports of U.S. products.

Directs the President, at the end of the negotiation period, if agreements are not reached to end currency manipulation promptly, to: (1) institute proceedings under the relevant U.S. and international trade law with respect to those countries that, based on the ITC findings, continue to engage in the most egregious currency manipulation; and (2) seek appropriate damages and remedies for the Nation's manufacturers and other affected parties.

Requires reports to the appropriate congressional committees on: (1) the effects on U.S. national security of countries engaging in significant currency manipulations, as well as the effect of such manipulation on critical manufacturing sectors such as semiconductors; (2) other trade practices and trade barriers by major East Asian trading nations (China, Japan, South Korea, Taiwan, among others) potentially in violation of international trade agreements; and (3) steps that could be taken to significantly improve trade enforcement efforts against unfair trade practices by competitor trading nations, and trade promotion for U.S. goods and services.