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Senate to take up China currency bill

By Agence France-Presse
Sunday, October 2, 2011 10:43 EDT
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WASHINGTON — The US Senate this week takes up a bill to punish China for its alleged currency manipulation, a measure that has divided the Republican presidential field and put the White House in a bind.

The legislation — backed by Democrats and Republicans in the polarized Congress, but opposed by Beijing and potent US business groups — faces a key procedural vote set for 5:30 pm (2130 GMT) Monday.

Democratic Senator Chuck Schumer, a key author of the measure, predicted the bill would clear that hurdle easily on the road to an “overwhelming vote” to approve it and send it to the House of Representatives.

“The time for asking China nicely is over,” he said Friday.

But the bill faces an uphill fight in the House, where Republican leaders have no plans to bring it up for a vote unless the issue flares up as a core dispute in the November 2012 presidential races, several aides said.

And while White House spokesman Jay Carney told reporters last week that the administration was “reviewing” the legislation and would not yet take a formal position, Schumer and others have said President Barack Obama opposes it.

The White House and Republican House leaders are likely mindful of stiff opposition to the bill from the business community in the wake of a letter from 51 US industry groups warning it would spark a “counterproductive” trade war.

The measure builds on congressional anger at the refusal by Obama and his Republican predecessor, George W. Bush, to formally designate China as a currency manipulator in annual reports.

It would make it harder to avoid such a diagnosis, while making it easier for US firms to seek retaliatory tariffs against Chinese imports if Beijing is found to keep its currency — and thus its goods — artificially cheap.

With the election season heating up, the bill’s backers have tied it to the sour US economy and the high 9.1 percent unemployment rate and said that China’s trade policy has cost millions of American jobs.

A recent study by the left-of-center Economic Policy Institute found that the US trade deficit with China has eliminated or displaced nearly 2.8 million jobs since 2001.

But the legislation has split the top two Republican White House contenders, with Texas Governor Rick Perry opposing it and former Massachusetts governor Mitt Romney saying he would make China’s currency an issue on his first day in office.

Romney has dubbed China an “economic threat” and vowed to designate Beijing a “currency manipulator,” a step that can trigger retaliatory US sanctions under existing law.

But “this is a free trade issue and Governor Perry does not support this bill,” said a spokesman for his campaign, Mark Miner.

House Democrats hope that anger at the sour economy and at what are seen as China’s unfair trade practices will help them force a vote with a little-used parliamentary procedure.

But so far, 174 Democrats — and not one Republican — have signed a so-called “discharge petition” to do just that, leaving it well shy of the 218 signatures it needs, according to House Minority Leader Nancy Pelosi’s office.

Last year, a similar bill cleared the House by a lopsided 348-79 margin, with 99 Republicans voting yes.

Beijing unsurprisingly opposes the measure: Chinese foreign ministry spokesman Hong Lei last week urged US lawmakers to “reconsider their decision and refrain from pushing through the bill” and warned against “politicizing economic trade issues and resorting to trade protectionism.”

Republican White House hopeful and former US ambassador to China Jon Huntsman told Fox News Channel last week that he “would sign it simply because you need to keep pressure on China” but warned Beijing would retaliate.

“You take action against China, you can expect them to rebut that action with commensurate tariffs,” he said. “During a recession, you don’t want a trade war.”

In late 2010, Obama himself said in the heartland state of Iowa that the yuan was “undervalued” and was “a contributing factor” to the yawning US trade deficit with China.

In May 2011, however, the US Treasury Department declined in a formal report to brand Beijing a currency manipulator, and congressional Democratic aides say Obama may get caught between opposing the bill out of worries it could spark a trade war and election-year pressure to look tough on China.

Beijing has a history of allowing the yuan to strengthen slightly when it expects to come under heightened pressure over the value of its currency.

Agence France-Presse
Agence France-Presse
AFP journalists cover wars, conflicts, politics, science, health, the environment, technology, fashion, entertainment, the offbeat, sports and a whole lot more in text, photographs, video, graphics and online.
 
 
 
 
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