USC Subchapter I

in effect

22 U.S.C. § 5301 Short title

This subchapter may be cited as the “Exchange Rates and International Economic Policy Coordination Act of 1988”.

The Congress finds that— (1) the macroeconomic policies, including the exchange rate policies, of the leading industrialized nations require improved coordination and are not consistent with long-term economic growth and financial stability; (2) currency values have a major role in determining the patterns of production and trade in the world economy; (3) the rise in the value of the dollar in the early 1980’s contributed substantially to our current trade deficit; (4) exchange rates among major trading nations have become increasingly volatile and a pattern of exchange rates has at times developed which contribute to substantial and persistent imbalances in the flow of goods and services between nations, imposing serious strains on the world trading system and frustrating both business and government planning; (5) capital flows between nations have become very large compared to trade flows, respond at times quickly and dramatically to policy and economic changes, and, for these reasons, contribute significantly to uncertainty in financial markets, the volatility of exchange rates, and the development of exchange rates which produce imbalances in the flow of goods and services between nations; (6) policy initiatives by some major trading nations that manipulate the value of their currencies in relation to the United States dollar to gain competitive advantage continue to create serious competitive problems for United States industries; (7) a more stable exchange rate for the dollar at a level consistent with a more appropriate and sustainable balance in the United States current account should be a major focus of national economic policy; (8) procedures for improving the coordination of macroeconomic policy need to be strengthened considerably; and (9) under appropriate circumstances, intervention by the United States in foreign exchange markets as part of a coordinated international strategic intervention effort could produce more orderly adjustment of foreign exchange markets and, in combination with necessary macroeconomic policy changes, assist adjustment toward a more appropriate and sustainable balance in current accounts.

22 U.S.C. § 5303 Statement of policy

It is the policy of the United States that— (1) the United States and the other major industrialized countries should take steps to continue the process of coordinating monetary, fiscal, and structural policies initiated in the Plaza Agreement of September 1985; (2) the goal of the United States in international economic negotiations should be to achieve macroeconomic policies and exchange rates consistent with more appropriate and sustainable balances in trade and capital flows and to foster price stability in conjunction with economic growth; (3) the United States, in close coordination with the other major industrialized countries should, where appropriate, participate in international currency markets with the objective of producing more orderly adjustment of foreign exchange markets and, in combination with necessary macroeconomic policy changes, assisting adjustment toward a more appropriate and sustainable balance in current accounts; and (4) the accountability of the President for the impact of economic policies and exchange rates on trade competitiveness should be increased.

22 U.S.C. § 5304 International negotiations on exchange rate and economic policies

(a) Multilateral negotiationsThe President shall seek to confer and negotiate with other countries—(1) to achieve—(A) better coordination of macroeconomic policies of the major industrialized nations; and (B) more appropriate and sustainable levels of trade and current account balances, and exchange rates of the dollar and other currencies consistent with such balances; and (2) to develop a program for improving existing mechanisms for coordination and improving the functioning of the exchange rate system to provide for long-term exchange rate stability consistent with more appropriate and sustainable current account balances. (b) Bilateral negotiationsThe Secretary of the Treasury shall analyze on an annual basis the exchange rate policies of foreign countries, in consultation with the International Monetary Fund, and consider whether countries manipulate the rate of exchange between their currency and the United States dollar for purposes of preventing effective balance of payments adjustments or gaining unfair competitive advantage in international trade. If the Secretary considers that such manipulation is occurring with respect to countries that (1) have material global current account surpluses; and (2) have significant bilateral trade surpluses with the United States, the Secretary of the Treasury shall take action to initiate negotiations with such foreign countries on an expedited basis, in the International Monetary Fund or bilaterally, for the purpose of ensuring that such countries regularly and promptly adjust the rate of exchange between their currencies and the United States dollar to permit effective balance of payments adjustments and to eliminate the unfair advantage. The Secretary shall not be required to initiate negotiations in cases where such negotiations would have a serious detrimental impact on vital national economic and security interests; in such cases, the Secretary shall inform the chairman and the ranking minority member of the Committee on Banking, Housing, and Urban Affairs of the Senate and of the Committee on Banking, Finance and Urban Affairs of the House of Representatives of his determination.

22 U.S.C. § 5305 Reporting requirements

(a) Reports requiredIn furtherance of the purpose of this chapter, the Secretary, after consultation with the Chairman of the Board, shall submit to the Committee on Banking, Finance and Urban Affairs of the House of Representatives and the Committee on Banking, Housing, and Urban Affairs of the Senate, on or before October 15 of each year, a written report on international economic policy, including exchange rate policy. The Secretary shall provide a written update of developments six months after the initial report. In addition, the Secretary shall appear, if requested, before both committees to provide testimony on these reports. (b) Contents of reportEach 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 our major trade competitors; (2) an evaluation of the factors in the United States and other economies that underlie conditions in the currency markets, including developments in bilateral trade and capital flows; (3) a description of currency intervention or other actions undertaken to adjust the actual exchange rate of the dollar; (4) an assessment of the impact of the exchange rate of the United States dollar on—(A) the ability of the United States to maintain a more appropriate and sustainable balance in its current account and merchandise trade account; (B) production, employment, and noninflationary growth in the United States; (C) the international competitive performance of United States industries and the external indebtedness of the United States; (5) recommendations for any changes necessary in United States economic policy to attain a more appropriate and sustainable balance in the current account; (6) the results of negotiations conducted pursuant to section 5304 of this title; (7) key issues in United States policies arising from the most recent consultation requested by the International Monetary Fund under article IV of the Fund’s Articles of Agreement; and (8) a report on the size and composition of international capital flows, and the factors contributing to such flows, including, where possible, an assessment of the impact of such flows on exchange rates and trade flows.

22 U.S.C. § 5306 Definitions

As used in this subchapter: (1) SecretaryThe term “Secretary” means the Secretary of the Treasury. (2) BoardThe term “Board” means the Board of Governors of the Federal Reserve System.