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GT Alert

US-China Trade Update: Chinese Currency Revaluation Occurs As Legislation Is Introduced to Apply Anti-Subsidy Laws Against China

July 2005

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On July 21, China revalued its currency 2.1 percent, changing the current exchange rate from 8.3 to 8.11 per U.S. dollar. This is good news for U.S. companies, as the revaluation will cause Chinese imports to become slightly more expensive. Conversely, for U.S. exporters, a stronger Chinese Yuan will make U.S. exports to China cheaper, leaving American companies the option of lowering their prices or increasing profits by leaving prices unchanged.

“The shifting of the exchange rate may provide U.S. importers of Chinese products some measure of relief if U.S. lawmakers view the revaluation as a first step in Chinese trade reform.”

The U.S. Congress has been considering trade sanctions against China if such a revaluation did not occur. The shifting of the exchange rate may provide U.S. importers of Chinese products some measure of relief if U.S. lawmakers view the revaluation as a first step in Chinese trade reform.

However, while the revaluation of the Yuan is a step towards reducing the threat of a trade war with China, the leadership of the House Ways and Means Committee introduced legislation this week to allow the application of U.S. anti-subsidy laws to imports from non-market economies such as China. The bill also includes other trade provisions introduced in response to growing congressional concerns over trade with China, including the creation of a system to closely monitor China’s intellectual property rights and market access. The bill also requires the administration to issue semi-annual reports to Congress on China’s advancement in fulfilling those commitments. Lastly, the bill authorizes an additional $6 million in funds for USTR and tightens measures for collecting antidumping duties from shippers who posted bonds and have since been unable to pay Customs.

 

Greenberg Traurig’s Global Trade Practice Group works with importers and exporters to closely monitor how these new policies will affect their business. For more information, please contact Philippe Bruno, Ira Shapiro, Steve Mulder or Pedro Pablo Permuy in the Washington, DC office at 202.331.3100.

© 2005 Greenberg Traurig


Additional Information:

For more information, please review our Global Trade Practice description, or feel free to contact one of our attorneys.


This GT ALERT is issued for informational purposes only and is not intended to be construed or used as general legal advice. Greenberg Traurig attorneys provide practical, result-oriented strategies and solutions tailored to meet our clients’ individual legal needs.