S AMDT 1254

S 1254 IS

To provide for identification of misaligned currency, require action to correct the misalignment, and for other purposes.

June 11, 2009

Mr. SCHUMER (for himself and Mr. GRAHAM) introduced the following bill; which was read twice and referred to the Committee on Banking, Housing, and Urban Affairs

To provide for identification of misaligned currency, require action to correct the misalignment, and for other purposes.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

This Act may be cited as the ‘Currency Exchange Rate Oversight Reform Act of 2009’.

SEC. 2. DEFINITIONS.

In this Act:

(1) ADMINISTERING AUTHORITY- The term ‘administering authority’ means the authority referred to in section 771(1) of the Tariff Act of 1930 (19 U.S.C. 1677(1)).

(2) AGREEMENT ON GOVERNMENT PROCUREMENT- The term ‘Agreement on Government Procurement’ means the agreement referred to in section 101(d)(17) of the Uruguay Round Agreements Act (19 U.S.C. 3511(d)(17)).

(3) COUNTRY- The term ‘country’ means a foreign country, dependent territory, or possession of a foreign country, and may include an association of 2 or more foreign countries, dependent territories, or possessions of countries into a customs union outside the United States.

(4) EXPORTING COUNTRY- The term ‘exporting country’ means the country in which the subject merchandise is produced or manufactured.

(5) FUNDAMENTAL MISALIGNMENT- The term ‘fundamental misalignment’ means a significant and sustained undervaluation of the prevailing real effective exchange rate, adjusted for cyclical and transitory factors, from its medium-term equilibrium level.

(6) FUNDAMENTALLY MISALIGNED CURRENCY- The term ‘fundamentally misaligned currency’ means a foreign currency that is in fundamental misalignment.

(7) REAL EFFECTIVE EXCHANGE RATE- The term ‘real effective exchange rate’ means a weighted average of bilateral exchange rates, expressed in price-adjusted terms.

(8) SECRETARY- The term ‘Secretary’ means the Secretary of the Treasury.

(9) STERILIZATION- The term ‘sterilization’ means domestic monetary operations taken to neutralize the monetary impact of increases in reserves associated with intervention in the currency exchange market.

(10) SUBJECT MERCHANDISE- The term ‘subject merchandise’ means the merchandise subject to an antidumping investigation, review, suspension agreement, or order referred to in section 771(25) of the Tariff Act of 1930 (19 U.S.C. 1677(25)).

(11) WTO AGREEMENT- The term ‘WTO Agreement’ means the agreement referred to in section 2(9) of the Uruguay Round Agreements Act (19 U.S.C. 3501(9)).

SEC. 3. REPORT ON INTERNATIONAL MONETARY POLICY AND CURRENCY EXCHANGE RATES.

(a) Reports Required-

(1) IN GENERAL- Not later than March 15 and September 15 of each calendar year, the Secretary, after consulting with the Chairman of the Board of Governors of the Federal Reserve System and the Advisory Committee on International Exchange Rate Policy, shall submit to Congress, a written report on international monetary policy and currency exchange rates.

(2) CONSULTATIONS- On or before March 30 and September 30 of each calendar year, the Secretary shall appear, if requested, before the Committee on Banking, Housing, and Urban Affairs and the Committee on Finance of the Senate and the Committee on Financial Services and the Committee on Ways and Means of the House of Representatives to provide testimony on the reports submitted pursuant to paragraph (1).

(b) Content of Reports- Each report submitted under subsection (a) shall contain--

(1) an analysis of currency market developments and the relationship between the United States dollar and the currencies of major economies and trading partners of the United States;

(2) a review of the economic and monetary policies of major economies and trading partners of the United States, and an evaluation of how such policies impact currency exchange rates;

(3) a description of any currency intervention by the United States or other major economies or trading partners of the United States, or other actions undertaken to adjust the actual exchange rate relative to the United States dollar;

(4) an evaluation of the domestic and global factors that underlie the conditions in the currency markets, including--

(A) monetary and financial conditions;

(B) accumulation of foreign assets;

(C) macroeconomic trends;

(D) trends in current and financial account balances;

(E) the size, composition, and growth of international capital flows;

(F) the impact of the external sector on economic growth;

(G) the size and growth of external indebtedness;

(H) trends in the net level of international investment; and

(I) capital controls, trade, and exchange restrictions;

(5) a list of currencies designated as fundamentally misaligned currencies pursuant to section 4(a)(2), and a description of any economic models or methodologies used to establish the list;

(6) a list of currencies designated for priority action pursuant to section 4(a)(3);

(7) an identification of the nominal value associated with the medium-term equilibrium exchange rate, relative to the United States dollar, for each currency listed under paragraph (6);

(8) a description of any consultations conducted or other steps taken pursuant to section 5, 6, or 7, including any actions taken to eliminate the fundamental misalignment; and

(9) a description of any determination made pursuant to section 9(a).

(c) Consultations- The Secretary shall consult with the Chairman of the Board of Governors of the Federal Reserve System and the Advisory Committee on International Exchange Rate Policy with respect to the preparation of each report required under subsection (a). Any comments provided by the Chairman of the Board of Governors of the Federal Reserve System or the Advisory Committee on International Exchange Rate Policy shall be submitted to the Secretary not later than the date that is 15 days before the date each report is due under subsection (a). The Secretary shall submit the report to Congress after taking into account all such comments received.

SEC. 4. IDENTIFICATION OF FUNDAMENTALLY MISALIGNED CURRENCIES.

(a) Identification-

(1) IN GENERAL- The Secretary shall analyze on a semiannual basis the prevailing real effective exchange rates of foreign currencies.

(2) DESIGNATION OF FUNDAMENTALLY MISALIGNED CURRENCIES- With respect to the currencies of countries that have significant bilateral trade flows with the United States, and currencies that are otherwise significant to the operation, stability, or orderly development of regional or global capital markets, the Secretary shall determine whether any such currency is in fundamental misalignment and shall designate such currency as a fundamentally misaligned currency.

(3) DESIGNATION OF CURRENCIES FOR PRIORITY ACTION- The Secretary shall designate a currency identified under paragraph (2) for priority action if the country that issues such currency is--

(A) engaging in protracted large-scale intervention in one direction in the currency exchange market, particularly if accompanied by partial or full sterilization;

(B) engaging in excessive and prolonged official or quasi-official accumulation of foreign assets, for balance of payments purposes;

(C) introducing or substantially modifying for balance of payments purposes a restriction on, or incentive for, the inflow or outflow of capital, that is inconsistent with the goal of achieving full currency convertibility; or

(D) pursuing any other policy or action that, in the view of the Secretary, warrants designation for priority action.

(b) Reports- The Secretary shall include a list of any foreign currency designated under paragraph (2) or (3) of subsection (a) in each report required by section 3.

SEC. 5. NEGOTIATIONS AND CONSULTATIONS.