II 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, Hous- ing, and Urban Affairs A BILL To establish a national goal and mechanism to achieve a trade-balancing exchange rate for the United States dol- lar, to impose a market access charge on certain pur- chases of United States assets, and for other purposes. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 SECTION 1. SHORT TITLE. 3 This Act may be cited as the ‘‘Competitive Dollar for 4 Jobs and Prosperity Act’’. 5 VerDate Sep 11 2014 03:30 Aug 08, 2019 Jkt 089200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\S2357.IS S2357 kjohnson on DSK79L0C42 with BILLS 2 •S 2357 IS SEC. 2. FINDINGS; SENSE OF CONGRESS. 1 (a) FINDINGS.—Congress makes the following find- 2 ings: 3 (1) The strength, vitality, and stability of the 4 United States economy and, more broadly, the effec- 5 tiveness of the global trading system are critically 6 dependent on an international monetary regime of 7 exchange rates that respond appropriately to elimi- 8 nate persistent trade surpluses or deficits by adjust- 9 ing to changes in global trade and capital flows. 10 (2) In recent decades, the United States dollar 11 has become persistently overvalued, in relation to its 12 equilibrium price, because of excessive foreign cap- 13 ital inflows from both public and private sources. 14 (3) Countries with persistent trade surpluses 15 maintain or benefit from undervalued currencies 16 over a long period of time. As a result, those coun- 17 tries overproduce, underconsume, and excessively 18 rely on consumers in countries with persistent trade 19 deficits for growth. Those countries also export their 20 unemployment and underemployment to countries 21 with persistent trade deficits. 22 (4) Countries with persistent trade deficits, in- 23 cluding the United States, absorb the overproduction 24 of countries with persistent trade surpluses, thereby 25 VerDate Sep 11 2014 03:30 Aug 08, 2019 Jkt 089200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S2357.IS S2357 kjohnson on DSK79L0C42 with BILLS 3 •S 2357 IS reducing domestic wages, manufacturing output and 1 employment, economic growth, and innovation. 2 (5) The United States possesses fiscal and 3 monetary tools to pursue national economic goals for 4 employment, production, investment, income, price 5 stability, and productivity. However, exchange rates 6 that do not adjust to balance international trade can 7 frustrate the achievement of those goals. The United 8 States does not have a tool to manage exchange 9 rates in the national interest. 10 (b) SENSE OF CONGRESS.—It is the sense of Con- 11 gress that— 12 (1) it is consistent with the obligations of the 13 United States as a member of the World Trade Or- 14 ganization and the International Monetary Fund 15 that the United States use a capital flow manage- 16 ment tool to move the United States dollar to its 17 trade-balancing exchange rate; and 18 (2) it is in the national interest of the United 19 States to establish exchange rate management tools 20 to consistently achieve a trade-balancing exchange 21 rate. 22 SEC. 3. DEFINITIONS. 23 In this Act: 24 VerDate Sep 11 2014 03:30 Aug 08, 2019 Jkt 089200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\S2357.IS S2357 kjohnson on DSK79L0C42 with BILLS 4 •S 2357 IS (1) COVERED BUYER.—The term ‘‘covered 1 buyer’’ means a foreign person or a person located 2 outside the United States that purchases a United 3 States asset in a covered transaction. 4 (2) COVERED TRANSACTION.—The term ‘‘cov- 5 ered transaction’’ means the purchase or acquisition 6 by a covered buyer of a United States asset the 7 value of which exceeds $10,000. 8 (3) CURRENT ACCOUNT BALANCE.—The term 9 ‘‘current account balance’’ means that current ac- 10 count surpluses or deficits do not exceed an average 11 of 0.5 percent of the gross domestic product of the 12 United States in any 5-year period. 13 (4) DOMESTIC FINANCIAL INSTITUTION.—The 14 term ‘‘domestic financial institution’’ has the mean- 15 ing given that term in section 5312 of title 31, 16 United States Code. 17 (5) ENTITY.—The term ‘‘entity’’ includes— 18 (A) a corporation, partnership, or limited 19 liability company; or 20 (B) a trust or estate. 21 (6) FOREIGN PERSON.—The term ‘‘foreign per- 22 son’’ means any individual or entity that is not a 23 United States person. 24 VerDate Sep 11 2014 03:30 Aug 08, 2019 Jkt 089200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\S2357.IS S2357 kjohnson on DSK79L0C42 with BILLS 5 •S 2357 IS (7) MARKET ACCESS CHARGE.—The term 1 ‘‘market access charge’’ means the fee imposed 2 under section 5 with respect to a covered trans- 3 action. 4 (8) PERSON.—The term ‘‘person’’ means an in- 5 dividual or entity. 6 (9) SECRETARY.—The term ‘‘Secretary’’ means 7 the Secretary of the Treasury. 8 (10) SECURITY; TRANSFER AGENT.—The terms 9 ‘‘security’’ and ‘‘transfer agent’’ have the meanings 10 given those terms in section 3 of the Securities Ex- 11 change Act of 1934 (15 U.S.C. 78c). 12 (11) UNITED STATES ASSET.— 13 (A) IN GENERAL.—Except as provided in 14 subparagraph (B), the term ‘‘United States 15 asset’’ means— 16 (i) a security, stock, bond, note, swap, 17 loan, or other financial instrument— 18 (I) the face value of which is de- 19 nominated in United States dollars; 20 (II) that is registered or located 21 in the United States; or 22 (III) that is an obligation of a 23 United States person; 24 VerDate Sep 11 2014 03:30 Aug 08, 2019 Jkt 089200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\S2357.IS S2357 kjohnson on DSK79L0C42 with BILLS 6 •S 2357 IS (ii) real property located in the United 1 States; 2 (iii) any ownership interest in an enti- 3 ty that is a United States person; 4 (iv) intellectual property owned by a 5 United States person; and 6 (v) any other asset class or trans- 7 action identified by the Board of Governors 8 of the Federal Reserve as trading in suffi- 9 cient volume to cause a risk of upward 10 pressure on the exchange rate of the 11 United States dollar. 12 (B) EXCEPTIONS.—The term ‘‘United 13 States asset’’ does not include— 14 (i) a good being exported from the 15 United States; or 16 (ii) currency or noninterest bearing 17 deposits. 18 (C) CONSIDERATION BY BOARD OF GOV- 19 ERNORS.—Not less frequently than annually, 20 the Board of Governors shall consider whether 21 to identify additional asset classes or trans- 22 actions under subparagraph (A)(v). 23 (12) UNITED STATES PERSON.—The term 24 ‘‘United States person’’ means— 25 VerDate Sep 11 2014 03:30 Aug 08, 2019 Jkt 089200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\S2357.IS S2357 kjohnson on DSK79L0C42 with BILLS 7 •S 2357 IS (A) a citizen or resident of the United 1 States; or 2 (B) an entity organized under the laws of 3 the United States or any jurisdiction within the 4 United States. 5 SEC. 4. EXCHANGE RATE MANAGEMENT POLICY AND 6 MECHANISMS. 7 (a) AMENDMENT TO FEDERAL RESERVE ACT.—Sec- 8 tion 2A of the Federal Reserve Act (12 U.S.C. 225a) is 9 amended— 10 (1) by inserting ‘‘the United States exchange 11 rate and’’ after ‘‘shall maintain’’; and 12 (2) by inserting ‘‘current account balance (as 13 defined in section 3 of the Competitive Dollar for 14 Jobs and Prosperity Act),’’ after ‘‘stable prices,’’. 15 (b) EXCHANGE RATE MANAGEMENT POLICY.— 16 (1) IN GENERAL.—The Board of Governors of 17 the Federal Reserve System shall establish an ex- 18 change rate management policy to achieve and main- 19 tain a current account balance. 20 (2) MECHANISMS.—To achieve a current ac- 21 count balance as required by paragraph (1), the 22 Board of Governors— 23 (A) shall use the market access charge im- 24 posed under section 5; and 25 VerDate Sep 11 2014 03:30 Aug 08, 2019 Jkt 089200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\S2357.IS S2357 kjohnson on DSK79L0C42 with BILLS 8 •S 2357 IS (B) may engage in foreign exchange inter- 1 vention. 2 SEC. 5. MARKET ACCESS CHARGE. 3 (a) IMPOSITION.—On and after the date that is 180 4 days after the date of the enactment of this Act, there 5 shall be imposed a market access charge on each covered 6 buyer in a covered transaction. 7 (b) CALCULATION OF RATE.— 8 (1) IN GENERAL.—The Board of Governors of 9 the Federal Reserve System shall establish and ad- 10 just the rate of the market access charge at a rate 11 that— 12 (A) achieves a current account balance not 13 later than 5 years after the date of the enact- 14 ment of this Act; and 15 (B) maintains a current account balance 16 thereafter. 17 (2) EFFECTS OF NONCRISIS MOVEMENTS.— 18 (A) IN GENERAL.—Subject to subpara- 19 graph (B), the Board of Governors may take 20 into consideration the minimization of disrup- 21 tive effects on output, employment, interest 22 rates, and foreign exchange, securities, and 23 asset markets. 24 VerDate Sep 11 2014 03:30 Aug 08, 2019 Jkt 089200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\S2357.IS S2357 kjohnson on DSK79L0C42 with BILLS 9 •S 2357 IS (B) LIMITATION.—The Board of Gov- 1 ernors may not adjust the market access charge 2 in reaction to noncrisis movements in the mar- 3 kets described in subparagraph (A). 4 (3) ALTERNATE INITIAL MARKET ACCESS 5 CHARGE.—If, on the date that is 180 days after the 6 date of the enactment of this Act, the Board of Gov- 7 ernors has not established the initial rate for the 8 market access charge, the initial market access 9 charge shall be established at the rate of 50 basis 10 points of the value of a covered transaction. 11 (c) COLLECTION AND REPORTING.— 12 (1) IN GENERAL.—The market access charge 13 shall be collected from a covered buyer in a covered 14 transaction as follows: 15 (A) In the case of a covered transaction in- 16 volving a registered security, the transfer agent 17 shall collect the market access charge. 18 (B) In the case of a covered transaction 19 not involving a registered security and through 20 which a domestic financial institution receives 21 funds from the covered buyer, the domestic fi- 22 nancial institution shall collect the market ac- 23 cess charge. 24 VerDate Sep 11 2014 03:30 Aug 08, 2019 Jkt 089200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\S2357.IS S2357 kjohnson on DSK79L0C42 with BILLS 10 •S 2357 IS (C) In the case of any covered transaction 1 not described in subparagraph (A) or (B), the 2 United States person that is the counterparty 3 to the covered buyer or otherwise receives funds 4 from the covered buyer pursuant to the covered 5 transaction shall collect the market access 6 charge. 7 (2) TRANSFER TO TREASURY.—At the end of 8 each month, each person collecting a market access 9 charge under paragraph (1) shall transfer to the 10 Secretary the amount of all market access charges 11 collected by the person during that month in such 12 manner as the Secretary may prescribe. 13 (3) REPORTING.—The Secretary shall require 14 each person collecting a market access charge under 15 paragraph (1) with respect to a covered transaction 16 to keep records and file reports with the Secretary 17 that include, in the manner and to the extent the 18 Secretary prescribes— 19 (A) the identity and address of partici- 20 pants in the transaction; 21 (B) a description of the legal capacity in 22 which each participant in the transaction is act- 23 ing; 24 (C) the identity of real parties in interest; 25 VerDate Sep 11 2014 03:30 Aug 08, 2019 Jkt 089200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\S2357.IS S2357 kjohnson on DSK79L0C42 with BILLS 11 •S 2357 IS (D) a description of the transaction, in- 1 cluding the nature of the United States asset 2 involved and the price paid; 3 (E) the amount of the market access 4 charge collected and the amount retained as a 5 service fee pursuant to paragraph (4); and 6 (F) such other information as the Sec- 7 retary may prescribe. 8 (4) SERVICE FEE.—A person collecting a mar- 9 ket access charge under paragraph (1) may retain, 10 from the amount of the market access charge col- 11 lected, a service fee, in an amount prescribed by the 12 Secretary, to compensate the person for the adminis- 13 trative costs of collecting the market access charge. 14 (5) PENALTIES.— 15 (A) TRANSFER AGENTS.—A transfer agent 16 that violates the requirements of this subsection 17 shall be subject to a penalty under section 32 18 of the Securities Exchange Act of 1934 (15 19 U.S.C. 78ff) to the same extent as if that agent 20 violated a provision of that Act. 21 (B) DOMESTIC FINANCIAL INSTITUTIONS 22 AND OTHER UNITED STATES PERSONS.—A do- 23 mestic financial institution or other United 24 States person that violates the requirements of 25 VerDate Sep 11 2014 03:30 Aug 08, 2019 Jkt 089200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\S2357.IS S2357 kjohnson on DSK79L0C42 with BILLS 12 •S 2357 IS this subsection shall be subject to a penalty 1 under section 5321(a)(1) or 5322(a) of title 31, 2 United States Code, to the same extent as if 3 that institution violated a provision of sub- 4 chapter II of chapter 53 of that title. 5 (d) DEPOSIT IN TREASURY.—The Secretary shall de- 6 posit all amounts received under subsection (c)(2) into the 7 general fund of the Treasury. 8 SEC. 6. REGULATIONS. 9 The Secretary shall prescribe such regulations as are 10 necessary to carry out this Act. 11 Æ VerDate Sep 11 2014 03:30 Aug 08, 2019 Jkt 089200 PO 00000 Frm 00012 Fmt 6652 Sfmt 6301 E:\BILLS\S2357.IS S2357 kjohnson on DSK79L0C42 with BILLS