U.S. Senators Olympia J. Snowe (R-ME) and Jay Rockefeller (D-WV) recently introduced a bill intended to hold America’s trading partners accountable for deliberately manipulating their currency. The Currency Exchange Rate Transparency Act would take steps to level the playing field for American workers by requiring the President to certify when sending a trade agreement to Congress that the government of the country the trade agreement is with has not manipulated its currency in the last ten years.

Some more information about the bill:

The Currency Exchange Rate Transparency Act would require that, before Congress approves any bill implementing a free trade agreement or extending permanent normal trade relations to another country, the President must first certify to Congress that the government of the potential trading partner has not, in the ten years preceding the certification, manipulated its currency for the purposes of gaining an unfair advantage in international trade.  To enforce this requirement, the bill states that the Senate shall cease consideration of the trade agreement if a point of order is made by any Senator against the bill because it is not accompanied by the certification from the President.

We applaud this effort. By exploiting the world currency markets, countries like China and Japan effectively subsidize their exports to the United States, and place a tariff on U.S. shipments to them. This manipulation is taking place on a massive scale. By some estimates, China’s yuan is undervalued by as much as 40 percent compared with the U.S. dollar.

China’s currency manipulation has contributed to the dramatic increase in the U.S. bilateral trade deficit with China, which now tops $270 billion a year. China has amassed foreign exchange reserves of more than $1 trillion, far surpassing any other nation’s reserves. It's time we start fighting currency manipulation in China and beyond-- and this legisation is a step in the right direction.

Read more about China’s currency manipulation.