CHINA / National
Senate panel OKs China currency bill
(Agencies/chinadaily.com.cn)
Updated: 2007-07-27 10:10
Chinese currency and US dollar banknotes are seen in this photo taken on
July 10, 2007. [newsphoto]
WASHINGTON - The US Senate Finance Committee voted 20-1 on Thursday to
give the US government new tools to press China to raise the value of its
currency, but the Bush administration said it opposed the bill.
The overwhelming vote shows Congress is headed toward passing legislation
by a big enough margin to overcome any presidential veto, said Sen.
Charles Schumer, a New York Democrat who helped craft the measure.
The bill's most significant provision requires the Commerce Department to
take "currency undervaluation" into account when calculating anti-dumping
duties on foreign goods, said Senate Finance Committee Max Baucus, a
Montana Democrat.
That could lead to higher duties already in place on many Chinese
products, and encourage US companies to seek new duties on additional
Chinese goods.
The US claimed that its trade deficit with China soared to a record
$232.5 billion in 2006 and is on track to surpass that this year. Some
lawmakers believe China's currency is undervalued by 25 percent to 40
percent, giving it a big price advantage in the US market and making US
goods more expensive in China.
The panel vote came just a few days before US Treasury Secretary Henry
Paulson is headed back to Beijing for talks, including quicker action on
currency reform.
"(We) do not believe the approaches taken in the bill reported today
would strengthen the hand of the United States in achieving essential
economic reform," the Treasury Department said in a statement.
A faster appreciation in the yuan was not a panacea to the broadening
U.S.-Chinese trade deficit or other ills, such as losses in manufacturing
jobs, Federal Reserve Chairman Ben S. Bernanke said last week.
Sen. Maria Cantwell, a Washington Democrat, said she voted against the
bill because she feared China's reaction.
"I do have concern this bill will be perceived as protectionist" and
invite retaliation, she said.
Boeing Co. is one of Washington's state biggest employers, and China is
one of Boeing's biggest customers.
China has made it clear that it won't cave in to US demands for faster
gains to ease the US trade deficit, saying a "large" appreciation of the
yuan would hurt China's economy.
The yuan's value wasn't the cause of the deficit, Wu said at a dinner in
Washington attended by Paulson and Federal Reserve Chairman Ben S.
Bernanke in May. About 85 percent of China's surplus with the US is from
foreign companies exporting products no longer made in the US, such as
shoes, she added.
Baucus described the bill as a broad compromise that puts pressure on
both the Bush administration and China without running afoul of World
Trade Organization rules.
"Today China's renminbi is the focus of our concerns. Tomorrow another
economy's currency may threaten even more devastating effects," Baucus
said.
The bill would repeal current law requiring the Treasury Department to
determine every six months whether a foreign country is manipulating its
currency for a trade advantage, and replace it with a new semi-annual
report identifying countries with "fundamentally misaligned currencies."
Sen. Charles Grassley, an Iowa Republican, said the legislation would
force the Bush administration to stop "pussyfooting" on the issue by
establishing clear criteria to identify countries with fundamentally
misaligned currencies, and requiring penalties -- such as increased
anti-dumping duties -- if they fail to make reforms within 90 days.
The bill also would require the Bush administration to take action
through the International Monetary Fund and eventually the World Trade
Organization against targeted countries that refuse to reform their
currency policies.
Another provision would let the Federal Reserve intervene in global
markets against the misaligned currency if the country has not made
appropriate reforms one year after being cited by the United States.
Several senators wanted the bill to define undervalued currencies as a
government subsidy to allow US companies to seek potentially larger
duties on Chinese goods.
Baucus and Grassley fought that approach on the grounds that it would
violate WTO rules.
But others disagreed and said they would push for that provision in the
final bill that emerges from Congress.
In its statement, the Treasury Department said it feared the Senate
Finance Committee's bill could violate international rules.
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