The Currency Exchange Rate Oversight Reform Act of 2011 is headed to a full Senate vote on Tuesday. You can track its congressional actions here.

The legislation, in summary,

• directs the US Treasury Secretary to report on currency market developments and prevailing real effective exchange rates and to identify countries that manipulate exchange rates
• requires the US Treasury Secretary to oppose increased “chairs or shares” at any international financial institution for a designated currency manipulator
• amends antidumping calculations and countervailing duty investigations to include currency undervaluation when looking at exports from a designated manipulator

If you look at the text of the act (PDF), you’ll realize that this bill does not impose any tariffs on China. It changes the criteria that the US Treasury Secretary will consider in choosing whether to designate a country a currency manipulator, and it makes that designation have bite in AD/CVD actions, government procurement, some multilateral financing, and IMF actions.

PIIE’s Nicholas Lardy describes the legislation in an interview, characterizing the inclusion of currency undervaluation in the countervailing duty calculation as the primary thrust of the act.

This legislation changes the trade-policy process; it doesn’t impose tariffs. Of course, the fundamental misalignment criteria may have been chosen with particular outcomes in mind, but the US Treasury has opted to not designate China a manipulator many times before. Will this legislation bind so tightly that the designation is inevitable?