Memorandom to Press on Hatch Amendment to S. 1619, the Currency Exchange Rate Oversight Reform Act
TO: Reporters and Editors
FROM: Antonia Ferrier and Julia Lawless for Senate Finance Committee
Ranking Member Orrin Hatch (R-Utah)
RE: Hatch Amendment to S. 1619, the Currency Exchange Rate Oversight Reform Act
DATE: Tuesday, October 4, 2011
This afternoon, U.S. Senator Orrin Hatch outlined his amendment #680 to S. 1619, the Currency Exchange Rate Oversight Reform Act, which is currently being debated in the Senate.
In a speech on the Senate floor, Senator Hatch said: “Fundamentally, we must remain focused on one question - will this legislation actually solve the currency problem with China. After careful consideration I have come to the conclusion that it will not. While well-intentioned, the bill is too focused on unilateral remedial actions. As a result, I fear that the bill will have only a marginal effect on China’s practices while at the same time potentially targeting many U.S. exporters for trade retaliation by China.
“Many of the other remedial provisions in this bill require the United States government to take other unilateral actions against China, many of which may actually harm U.S. exporters directly or expose them to potential retaliation by the Chinese. To succeed over the long-term, I think we must go in a different direction. My amendment does just that.”
Summary of Hatch Amendment #680 on Plurilateral Currency Negotiations:
The remedies under S. 1619 are unilateral and likely have limited effect on China’s currency manipulation. This amendment seeks a long-term and more effective solution to currency manipulation by mandating negotiations with like-minded trading partners to counter the effect of China’s currency practices and to increase multilateral pressure on China and other currency manipulators to modify their practices. It does so by directing the Administration to negotiate within the International Monetary Fund and the World Trade Organization to develop effective rules and remedies to mitigate the adverse trade and economic effects of fundamentally misaligned currencies designated for priority action and to encourage priority action countries to modify their currency practices.
If these WTO and IMF negotiations do not produce results within 90 days, the Amendment directs the Administration to negotiate new plurilateral agreements to achieve these same objectives. The Amendment maintains pressure upon the Administration to act by requiring a report to Congress on their progress within 180 days, including whether additional authority is needed from Congress to mitigate the adverse trade and economic effects of China’s currency manipulation or to implement coordinated actions against currency manipulators under these negotiations. The amendment also strikes provisions in S. 1619 which required increased duties on imports, bans on federal procurement and mandatory opposition to multilateral loans.
Finally, the Amendment takes advantage of on-going negotiations such as the Trans Pacific Partnership by establishing a new priority negotiating objective for ongoing trade negotiations (and future trade negotiations) to prohibit parties to the agreement from fundamentally misaligning their currencies and to work together to mitigate the adverse trade and economic effects of non-party priority action currencies.