Wednesday, April 06, 2005

Congress weighs China currency action

By William L. Watts, MarketWatch
Last Update: 6:28 PM ET April 6, 2005
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WASHINGTON (MarketWatch) - The Senate and House were set to separately consider legislation this week that would put limits on Chinese imports unless Beijing allows its currency to become more flexible.

Sens. Charles Schumer, D-N.Y., and Lindsey Graham, R-S.C., introduced an amendment Wednesday to a State Department appropriations bill that would slap a 27.5% tariff on Chinese imports if China doesn't revalue its currency within 180 days.

Lawmakers have expressed growing frustration over China's refusal to weaken the yuan's peg to the dollar. They contend that the tie has left the yuan significantly undervalued, putting U.S. manufacturers and workers at a disadvantage and contributing to the sharp rise in China's trade surplus with the United States.

"We think there is no more broad-based and serious violation of the spirit and rules of international trade than a purposefully undervalued currency," Schumer said in a statement. "When those conditions are violated, the system must respond or else the actions of one nation will upset the whole global balance."

On the House side, Reps. Duncan Hunter, R-Calif., and Tim Ryan, D-Ohio, are scheduled Thursday to unveil legislation that supporters said will use existing trade laws, in compliance with the World Trade Organization, to address China's currency peg. Critics of the Schumer proposal have argued that his approach would violate WTO rules.

Senate Foreign Relations Committee Chairman Richard Lugar, R-Ind., sought to use a procedural move to set aside the amendment in the Senate, arguing that the issue fell under the jurisdiction of the Senate Finance Committee, which has oversight over trade policy.

But Lugar's motion to "table," or set aside, the amendment was defeated in 67-33 vote. A vote on the amendment itself is still pending.

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