Petitions Under Section 302 on the Valuation of Chinese Currency; Decisions Not to Initiate Investigations

AGENCY:

Office of the United States Trade Representative.

ACTION:

Decisions not to initiate investigations.

SUMMARY:

The United States Trade Representative (USTR) has determined not to initiate investigations under section 302 of the Trade Act of 1974 with respect to petitions addressed to the valuation of Chinese currency because initiation of investigations would not be effective in addressing the issues raised in the petitions.

EFFECTIVE DATES:

With respect to the petition filed by the China Currency Coalition: September 9, 2004. With respect to the petition filed by the Congressional China Currency Action Coalition: November 12, 2004.

FOR FURTHER INFORMATION CONTACT:

Terrence McCartin, Senior Director of Monitoring and Enforcement for China, (202) 395-3900; or William Busis, Associate General Counsel, (202) 395-3150.

SUPPLEMENTARY INFORMATION:

On September 9, 2004, the China Currency Coalition filed a petition pursuant to section 302(a)(1) of the Trade Act of 1974, as amended (the Trade Act), alleging that certain acts, policies and practices of the Government of China with respect to the valuation of Chinese currency deny and violate international legal rights of the United States, are unjustifiable, and burden or restrict U.S. commerce. In particular, the petition alleged that China's acts, policies and practices that maintain a fixed exchange rate vis a vis the U.S. dollar have resulted in a significant undervaluation of Chinese currency. The petition alleged that these acts, policies and practices: amount to a prohibited export subsidy under the Agreement on Subsidies and Countervailing Measures and articles VI and XVI of the General Agreement on Tariffs and Trade 1994 (GATT 1994); amount—under article XV of the GATT 1994—to exchange action that frustrates the intent of articles I, II, III, and XI of the GATT 1994; and amount to subsidies that are inconsistent with China's obligations under articles 3, 9, and 10 of the Agreement on Agriculture. The petition also alleged that these acts, policies and practices of China violate international legal rights of the United States under articles IV and VIII of the Articles of Agreement of the International Monetary Fund, and that they burden or restrict U.S. commerce by, among other things, suppressing U.S. manufacturing for domestic consumption and the growth in U.S. exports.

Upon receipt of the petition, the USTR determined not to initiate an investigation under section 302 of the Trade Act because an investigation would not be effective in addressing the acts, policies, and practices covered in the petition. The Administration is currently involved in efforts to address with the Government of China the currency valuation issues raised in the petition. The USTR believes that initiation of an investigation under section 302 would hamper, rather than advance, Administration efforts to address Chinese currency valuation policies.

Subsequent to the USTR's decision not to initiate an investigation in response to the petition filed by the China Currency Coalition, a different petitioner—the Congressional China Currency Action Coalition—filed a petition on September 30, 2004 with respect to Chinese currency valuation. As compared to the earlier petition, the second petition addressed the same acts, policies and practices of China, and contained substantially the same allegations that those acts, policies, and practices deny and violate international legal rights of the United States, are unjustifiable, and burden or restrict U.S. commerce. The USTR's determination with respect to the second petition was the same as his determination with respect to the earlier petition: namely, the USTR decided not to initiate an investigation in response to the second petition because an investigation would not be effective in addressing the acts, policies, and practices covered in the petition.