E7-16455. Petition under Section 302 on China's Currency Valuation; Decision Not To Initiate Investigation

AGENCY:

Office of the United States Trade Representative.

ACTION:

Decision not to initiate investigation.

SUMMARY:

The United States Trade Representative (USTR) has determined not to initiate an investigation under section 302 of the Trade Act of 1974 with respect to a petition addressed to China's currency valuation policies because initiation of an investigation would not be effective in addressing the issues raised in the petition.

EFFECTIVE DATE:

June 14, 2007.

FOR FURTHER INFORMATION CONTACT:

Terrence J. McCartin, Deputy Assistant United States Trade Representative for China Enforcement, [phone]; or William Busis, Associate General Counsel and Chairman of the Section 301 Committee, [phone].

SUPPLEMENTARY INFORMATION:

On May 17, 2007, the Bipartisan China Currency Action 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 China's 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-á-vis the U.S. dollar have resulted in a significant undervaluation of China's 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); exchange action under article XV of the GATT 1994 that frustrates the intent of articles I, II, III, VI, XI , and XVI of the GATT 1994; and 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.

On June 14, 2007, the USTR determined not to initiate an investigation under section 302 of the Trade Act because, among other reasons, 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 China's currency valuation policies.

William Busis,

Chairman, Section 301 Committee.