US senators push for China currency bill
Two U.S. senators on Monday launched a last-ditch effort to pass legislation to pressure China to raise the value of its currency by trying to attach it to a tax plan headed toward expected approval.world Updated: Dec 18, 2010 11:44 IST
Two U.S. senators on Monday launched a last-ditch effort to pass legislation to pressure China to raise the value of its currency by trying to attach it to a tax plan headed toward expected approval.
The move would require the backing of all senators, making it a long shot.
But U.S. steel, textile and some other manufacturers hailed the attempt by Sherrod Brown, a Democrat, and Olympia Snowe, a Republican, to win Senate approval of a currency bill already passed by the House of Representatives.
The two senators are seeking to persuade their colleagues to pass the currency bill as part of an unrelated $858 billion package agreed between President Barack Obama and Republicans to extend tax breaks that expire at the end of the year.
"Addressing Chinese currency manipulation is vital to getting our economy back on track, which is why the Senate should act quickly," Brown said.
Beijing's currency policies long have been a sticking point in U.S.-Sino relations. It is likely to be one of the top issues when U.S. President Barack Obama meets with Chinese President Hu Jintao in January.
The House currency bill, passed in late September, addresses concerns that China undervalues its yuan currency by anywhere from 15 percent to 40 percent to give its companies a price advantage in international trade.
China held the yuan steady against the dollar for nearly two years but relaxed its peg against the dollar in mid-June. Since then it has risen about 2.4 percent.
Many U.S. lawmakers blame Beijing's currency practices for the huge trade deficit with China, although most economists say it is only one of many factors.
The U.S. trade deficit with China is the largest with any country and this year could top $270 billion, surpassing the 2008 record of $268 billion.
The deficit totaled nearly $229 billion in the first 10 months of 2010, up 20 percent from the same period in 2009.
"Our amendment would, at long last, make certain our government is prepared to investigate currency manipulation policies and penalize violators of global trade rules, whose distortions and inequities have undercut the ability of our nation's workers to thrive and compete both nationally and world-wide," Snowe said.
The House bill will die if it is not approved by the Senate during the current Congress, which ends by Jan 5.
It was not yet certain what, if any, amendments Senate leaders would allow to be considered as part of the tax bill.
"We are working out the amendment process" with Senate Republican Leader Mitch McConnell, said a spokesman for Senate Majority Leader Harry Reid.
However, Senate rules esssentially would require all senators to support bringing the amendment to the floor for a vote, giving a single senator the power to block it.
The Fair Currency Coalition, which represents U.S. steel, textile, labor and other groups, said approval of the amendment was "crucial to America's economy. Currency misalignment has diverted the investment need to sustain a productive economy, leading to the loss of good jobs and sound economic growth."
However, many other business groups, such as the U.S. Chamber of Commerce, worry approval of the bill could spark retaliation by Beijing.
The push by the two senators came as Chinese officials were gathering in Washington for high-level trade talks under an annual forum called the U.S.-China Joint Commission on Commerce Trade, or JCCT.
U.S. Treasury Secretary Timothy Geithner, the Obama administration's official in charge of currency policy, will meet Chinese Vice Premier Wang Qishan on Tuesday before the formal JCCT meetings, a Treasury spokeswoman said.
The House passed its currency bill in late September by a solid bipartisan vote of 348-79.
The bill clarifies the Commerce Department's authority to treat currency undervaluation as a subsidy under U.S. trade law so that companies could apply for offsetting countervailing duties against imports from China on a case-by-case basis.
First Published: Dec 18, 2010 11:36 IST