WASHINGTON (Sept. 30, 2010) — By a 348-79 vote, the U.S. House of Representatives has passed H.R. 2348, the Currency Exchange Rate Oversight Reform Act, a bill designed to levy tariffs against China and other countries that undervalue their currencies as a tool for gaining advantage in world trade.
More than 100 House Republicans voted for the bill, an unusual occurrence in a Congress marked by severe partisanship.
The longtime severity of the U.S. trade deficit with China—amounting to more than $145 billion so far this year, according to the U.S. Census Bureau—has led to widespread calls from U.S. industry and labor for action to force China to revalue the yuan. One of the staunchest supporters of such action is the United Steelworkers (USW) union. It has already persuaded the Obama administration to levy three years of tariffs against Chinese passenger and light truck tire imports and is seeking further action against alleged unfair trade practices in China's green technology industry.
“This bill will give us the tools we need to address the shuttered factories and shattered dreams that currency manipulation has caused,” said USW International President Leo W. Gerard about the bill's House passage.
Some retail organizations, however, opposed the bill's passage.
“While we agree that the Chinese currency needs to move toward a market-determined exchange rate, H.R. 2378 would be ineffective in addressing the currency issue and would create significant costs for U.S. companies and workers in retail and other industries,” said Steve Pfister, senior vice president for government relations for the National Retail Federation, in a press release just before the House vote.
China's Ministry of Commerce, meanwhile, said after the vote that the bill violates World Trade Organization rules. The Chinese government has made some tentative steps recently toward floating the yuan on world currency markets, and on Sept. 30 it said the yuan had reached 6.6936 to the U.S. dollar the day before—the currency's highest level ever.
S. 3134, the Senate companion bill to H.R. 2378, is currently before the Senate Finance Committee.