June 13, 2007

Senators Dodd and Shelby React to the Treasury Department's International Economic and Exchange Rate Policy Report

Washington, D.C. – Senators Chris Dodd (D-CT) and Richard Shelby (R-AL), Chairman and Ranking Member of the Senate Banking Committee, today expressed disappointment upon receiving the bi-annual International Economic and Exchange Rate Policy Report from the U.S. Treasury Department. Specifically, the Senators were concerned that the report did not identify China as a currency manipulator, an oversight that has adverse effects on the American manufacturing industry, the U.S. trade deficit, and our overall competitiveness. Yesterday, Senators Dodd and Shelby announced legislation which will, among other things, create tough, new authority for both the Treasury Department and the Congress to act to provide a level playing field for U.S. manufacturers and workers. The legislation would also tighten the definition of currency manipulation to provide for greater clarity and to prevent ambiguity or delay in addressing the problem.
    “Regrettably, Treasury’s report is noteworthy more for what it fails to say than for what it says,” said Dodd. “Despite acknowledging ‘heavy foreign exchange market intervention by China's central bank to manage the currency,’ Treasury continues to avoid stating publicly what nearly all expert, and even casual, observers agree on – that China, by continuing to undervalue its exchange rate against the U.S. dollar, is manipulating its currency at the expense of American workers and our economy. The Treasury Department owes it to the American people to give U.S. companies and workers a fair chance at competing in the global marketplace, and I am disappointed they have let lapse yet another opportunity to work toward that goal. “Secretary Paulson’s efforts to engage the Chinese through dialogue are commendable, but after two meetings of the Strategic Economic Dialogue, numerous Congressional hearings, and this most recent Exchange Rate Report, it is clear that dialogue alone is not enough and legislative action is needed. Treasury continues to defend its inaction on the inability to determine whether the ‘intent’ behind China’s exchange rate policy is to gain an unfair competitive advantage in international trade. The Dodd-Shelby bill will bring this technical dance to an end by requiring Treasury to identify currency manipulation based on facts, not subjective interpretations about intent or purpose.”
Senator Shelby said, “I am disappointed by Treasury’s reluctance yet again to label China a currency manipulator in its report today. The facts clearly show that China manipulates its currency thereby giving it an unfair trade advantage. Treasury, however, reads current law as requiring a finding of ‘intent to manipulate’. I believe that the Chinese intentions associated with their efforts to manipulate their currency are irrelevant. The salient facts are that they manipulate and that provides them with an unfair trade advantage.”
    “In my judgment, as long as Treasury interprets current law to require a finding of intent to manipulate, our trade imbalance with China will continue. For this reason, I am pleased to join with Chairman Dodd in introducing legislation that will make Treasury’s determination fact-based, while at the same time providing Treasury with additional tools to remedy this situation on behalf of American workers.”
Click here for a summary of the key provisions of the legislation.