“We agree that China needs an exchange rate that better responds to global trade flows, and believe that China should implement concrete measures to move toward a market-determined exchange rate,” said the organizations in a letter to Rep. Sander Levin (D-MI), chairman of the Committee on Ways & Means and Rep. Dave Camp (R-MI), ranking member. The Committee is expected to hold a hearing on the issue Sept. 15, 2010.
“We strongly disagree that legislation is the best means to achieve that goal,” the letter states. “Instead, we believe the United States should continue to work multilaterally and bilaterally to press China to allow market forces to determine the value of its currency, and thereby aid in the global economic rebalancing that it has called for along with the other members of the G-20.”
The letter lists a number of serious problems with the legislation, including it would require an increase in anti-dumping duties for the estimated amount of currency undervaluation and grant authority to the Department of Commerce to investigate other nations’ currency undervaluation as a trade subsidy eligible to be offset by countervailing duties (C.V.D.s).
The proposed legislation also appears to violate the United States’ commitments under World Trade Organization (W.T.O.) rules governing the calculation of antidumping duties and the types of subsidies that are subject to countervailing duties. Furthermore, the United States’ non-market economy antidumping methodology already adjusts for currency undervaluation, as margins are calculated using market-based values from a third country and do not use Chinese costs or prices.
“There are indeed major trade challenges that the U.S. faces with China – in our own market, in the Chinese market and in third-country markets. We have made progress in some areas over time, but not nearly enough in many others. These critical issues need to be addressed to achieve the real goal – a healthy and sustainable trading relationship with China. But this goal will not be achieved through a singular focus on currency or the type of damaging and unilateral legislation proposed,” the letter states.
“To address our economic and commercial challenges with China, the United States government, in close coordination with the private sector, must develop a comprehensive and coordinated strategy using all appropriate mechanisms, including aggressive and effective bilateral and multilateral initiatives; existing, legally-based trade remedies; and international dispute settlement, such as W.T.O. cases, when well-defined and winnable. We must actively coordinate with other like-minded countries in addressing these issues with China, an approach that has had some success in a number of areas. We should not, however, undermine or violate the international rules that help our economy prosper in an attempt to achieve those goals,” the letter concludes.
To read the letter, visit: http://www.meatami.com/ht/a/GetDocumentAction/i/62702