Bill Summary
This legislation, titled the "Competitive Dollar for Jobs and Prosperity Act," aims to establish a national goal and mechanism to achieve a trade-balancing exchange rate for the United States dollar. This would involve imposing a market access charge on certain purchases of US assets, such as securities, real property, and intellectual property, that exceed $10,000. The charge would be used to adjust the exchange rate in order to achieve a current account balance, which is when a country's trade surpluses or deficits do not exceed an average of 0.5% of its gross domestic product (GDP) over a 5-year period. The bill also empowers the Federal Reserve to use foreign exchange intervention, if necessary, to achieve this balance. The Secretary of the Treasury would be responsible for collecting and reporting the market access charges, and any violations of this legislation would result in penalties. Overall, the purpose of this legislation is to manage the value of the US dollar in order to promote economic growth, job creation, and balance in international trade.
Possible Impacts
1. The establishment of a market access charge on certain purchases of US assets could affect foreign investors and entities looking to acquire US assets, as they would now have to pay an additional fee. This could potentially deter foreign investment in the US and impact the economy.
2. The use of a capital flow management tool to manage exchange rates could affect businesses and consumers who rely on stable exchange rates for their international transactions. Fluctuations in the value of the US dollar could impact the cost of imported goods and services, as well as the profitability of exporting companies.
3. The emphasis on achieving a trade-balancing exchange rate could potentially lead to changes in trade policies and regulations, which could have an impact on industries and businesses that heavily rely on imports or exports. This could also affect job opportunities and economic growth in certain sectors.
[Congressional Bills 116th Congress]
[From the U.S. Government Publishing Office]
[S. 2357 Introduced in Senate (IS)]
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116th CONGRESS
1st Session
S. 2357
To establish a national goal and mechanism to achieve a trade-balancing
exchange rate for the United States dollar, to impose a market access
charge on certain purchases of United States assets, and for other
purposes.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
July 31, 2019
Ms. Baldwin (for herself and Mr. Hawley) introduced the following bill;
which was read twice and referred to the Committee on Banking, Housing,
and Urban Affairs
_______________________________________________________________________
A BILL
To establish a national goal and mechanism to achieve a trade-balancing
exchange rate for the United States dollar, to impose a market access
charge on certain purchases of United States assets, and for other
purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Competitive Dollar for Jobs and
Prosperity Act''.
SEC. 2. FINDINGS; SENSE OF CONGRESS.
(a) Findings.--Congress makes the following findings:
(1) The strength, vitality, and stability of the United
States economy and, more broadly, the effectiveness of the
global trading system are critically dependent on an
international monetary regime of exchange rates that respond
appropriately to eliminate persistent trade surpluses or
deficits by adjusting to changes in global trade and capital
flows.
(2) In recent decades, the United States dollar has become
persistently overvalued, in relation to its equilibrium price,
because of excessive foreign capital inflows from both public
and private sources.
(3) Countries with persistent trade surpluses maintain or
benefit from undervalued currencies over a long period of time.
As a result, those countries overproduce, underconsume, and
excessively rely on consumers in countries with persistent
trade deficits for growth. Those countries also export their
unemployment and underemployment to countries with persistent
trade deficits.
(4) Countries with persistent trade deficits, including the
United States, absorb the overproduction of countries with
persistent trade surpluses, thereby reducing domestic wages,
manufacturing output and employment, economic growth, and
innovation.
(5) The United States possesses fiscal and monetary tools
to pursue national economic goals for employment, production,
investment, income, price stability, and productivity. However,
exchange rates that do not adjust to balance international
trade can frustrate the achievement of those goals. The United
States does not have a tool to manage exchange rates in the
national interest.
(b) Sense of Congress.--It is the sense of Congress that--
(1) it is consistent with the obligations of the United
States as a member of the World Trade Organization and the
International Monetary Fund that the United States use a
capital flow management tool to move the United States dollar
to its trade-balancing exchange rate; and
(2) it is in the national interest of the United States to
establish exchange rate management tools to consistently
achieve a trade-balancing exchange rate.
SEC. 3. DEFINITIONS.
In this Act:
(1) Covered buyer.--The term ``covered buyer'' means a
foreign person or a person located outside the United States
that purchases a United States asset in a covered transaction.
(2) Covered transaction.--The term ``covered transaction''
means the purchase or acquisition by a covered buyer of a
United States asset the value of which exceeds $10,000.
(3) Current account balance.--The term ``current account
balance'' means that current account surpluses or deficits do
not exceed an average of 0.5 percent of the gross domestic
product of the United States in any 5-year period.
(4) Domestic financial institution.--The term ``domestic
financial institution'' has the meaning given that term in
section 5312 of title 31, United States Code.
(5) Entity.--The term ``entity'' includes--
(A) a corporation, partnership, or limited
liability company; or
(B) a trust or estate.
(6) Foreign person.--The term ``foreign person'' means any
individual or entity that is not a United States person.
(7) Market access charge.--The term ``market access
charge'' means the fee imposed under section 5 with respect to
a covered transaction.
(8) Person.--The term ``person'' means an individual or
entity.
(9) Secretary.--The term ``Secretary'' means the Secretary
of the Treasury.
(10) Security; transfer agent.--The terms ``security'' and
``transfer agent'' have the meanings given those terms in
section 3 of the Securities Exchange Act of 1934 (15 U.S.C.
78c).
(11) United states asset.--
(A) In general.--Except as provided in subparagraph
(B), the term ``United States asset'' means--
(i) a security, stock, bond, note, swap,
loan, or other financial instrument--
(I) the face value of which is
denominated in United States dollars;
(II) that is registered or located
in the United States; or
(III) that is an obligation of a
United States person;
(ii) real property located in the United
States;
(iii) any ownership interest in an entity
that is a United States person;
(iv) intellectual property owned by a
United States person; and
(v) any other asset class or transaction
identified by the Board of Governors of the
Federal Reserve as trading in sufficient volume
to cause a risk of upward pressure on the
exchange rate of the United States dollar.
(B) Exceptions.--The term ``United States asset''
does not include--
(i) a good being exported from the United
States; or
(ii) currency or noninterest bearing
deposits.
(C) Consideration by board of governors.--Not less
frequently than annually, the Board of Governors shall
consider whether to identify additional asset classes
or transactions under subparagraph (A)(v).
(12) United states person.--The term ``United States
person'' means--
(A) a citizen or resident of the United States; or
(B) an entity organized under the laws of the
United States or any jurisdiction within the United
States.
SEC. 4. EXCHANGE RATE MANAGEMENT POLICY AND MECHANISMS.
(a) Amendment to Federal Reserve Act.--Section 2A of the Federal
Reserve Act (12 U.S.C. 225a) is amended--
(1) by inserting ``the United States exchange rate and''
after ``shall maintain''; and
(2) by inserting ``current account balance (as defined in
section 3 of the Competitive Dollar for Jobs and Prosperity
Act),'' after ``stable prices,''.
(b) Exchange Rate Management Policy.--
(1) In general.--The Board of Governors of the Federal
Reserve System shall establish an exchange rate management
policy to achieve and maintain a current account balance.
(2) Mechanisms.--To achieve a current account balance as
required by paragraph (1), the Board of Governors--
(A) shall use the market access charge imposed
under section 5; and
(B) may engage in foreign exchange intervention.
SEC. 5. MARKET ACCESS CHARGE.
(a) Imposition.--On and after the date that is 180 days after the
date of the enactment of this Act, there shall be imposed a market
access charge on each covered buyer in a covered transaction.
(b) Calculation of Rate.--
(1) In general.--The Board of Governors of the Federal
Reserve System shall establish and adjust the rate of the
market access charge at a rate that--
(A) achieves a current account balance not later
than 5 years after the date of the enactment of this
Act; and
(B) maintains a current account balance thereafter.
(2) Effects of noncrisis movements.--
(A) In general.--Subject to subparagraph (B), the
Board of Governors may take into consideration the
minimization of disruptive effects on output,
employment, interest rates, and foreign exchange,
securities, and asset markets.
(B) Limitation.--The Board of Governors may not
adjust the market access charge in reaction to
noncrisis movements in the markets described in
subparagraph (A).
(3) Alternate initial market access charge.--If, on the
date that is 180 days after the date of the enactment of this
Act, the Board of Governors has not established the initial
rate for the market access charge, the initial market access
charge shall be established at the rate of 50 basis points of
the value of a covered transaction.
(c) Collection and Reporting.--
(1) In general.--The market access charge shall be
collected from a covered buyer in a covered transaction as
follows:
(A) In the case of a covered transaction involving
a registered security, the transfer agent shall collect
the market access charge.
(B) In the case of a covered transaction not
involving a registered security and through which a
domestic financial institution receives funds from the
covered buyer, the domestic financial institution shall
collect the market access charge.
(C) In the case of any covered transaction not
described in subparagraph (A) or (B), the United States
person that is the counterparty to the covered buyer or
otherwise receives funds from the covered buyer
pursuant to the covered transaction shall collect the
market access charge.
(2) Transfer to treasury.--At the end of each month, each
person collecting a market access charge under paragraph (1)
shall transfer to the Secretary the amount of all market access
charges collected by the person during that month in such
manner as the Secretary may prescribe.
(3) Reporting.--The Secretary shall require each person
collecting a market access charge under paragraph (1) with
respect to a covered transaction to keep records and file
reports with the Secretary that include, in the manner and to
the extent the Secretary prescribes--
(A) the identity and address of participants in the
transaction;
(B) a description of the legal capacity in which
each participant in the transaction is acting;
(C) the identity of real parties in interest;
(D) a description of the transaction, including the
nature of the United States asset involved and the
price paid;
(E) the amount of the market access charge
collected and the amount retained as a service fee
pursuant to paragraph (4); and
(F) such other information as the Secretary may
prescribe.
(4) Service fee.--A person collecting a market access
charge under paragraph (1) may retain, from the amount of the
market access charge collected, a service fee, in an amount
prescribed by the Secretary, to compensate the person for the
administrative costs of collecting the market access charge.
(5) Penalties.--
(A) Transfer agents.--A transfer agent that
violates the requirements of this subsection shall be
subject to a penalty under section 32 of the Securities
Exchange Act of 1934 (15 U.S.C. 78ff) to the same
extent as if that agent violated a provision of that
Act.
(B) Domestic financial institutions and other
united states persons.--A domestic financial
institution or other United States person that violates
the requirements of this subsection shall be subject to
a penalty under section 5321(a)(1) or 5322(a) of title
31, United States Code, to the same extent as if that
institution violated a provision of subchapter II of
chapter 53 of that title.
(d) Deposit in Treasury.--The Secretary shall deposit all amounts
received under subsection (c)(2) into the general fund of the Treasury.
SEC. 6. REGULATIONS.
The Secretary shall prescribe such regulations as are necessary to
carry out this Act.
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