I'm going to go out on (somewhat of) a limb, and predict that this legislation, or something like it, will pass and result in a major trade dispute in the near future:
US lawmakers on Wednesday unveiled a plan to retaliate against countries, like China, that allegedly manipulate their currencies to snare an edge in international trade.
"The time has come for Congress to stand up for American workers and not allow China to run roughshod over the American economy. With this legislation we will finally force China to stop cheating and level the playing field for America's manufacturers," said Republican Representative Tim Murphy.
The Currency Reform for Fair Trade Act, backed by Republicans and Democrats as well as business groups and major labor unions, aims to use US anti-dumping and countervailing duties to strike back at prolonged currency manipulation.
I make this prediction because direct action (e.g., a WTO complaint against currency manipulation) seems unlikely, based on the recent statements I've seen from Obama administration officials on the matter. There is strong support for some action to be taken, though, and acting unilaterally in this way may be the easiest approach politically. Yes, there will be concerns about WTO complaints being filed against the legislation, but this may be a situation like the Byrd Amendment, where the legislation passes and then an adverse WTO ruling eventually gets rid of it (or the ruling upholds it -- you never know).
Or, I might be completely wrong.
