Top U.S. officials told Congress on Wednesday they had serious concerns about Chinese trade policies that keep out American companies and would take strong action if necessary to pry open the market.
In testimony prepared for the Senate Finance Committee, U.S. Trade Representative Ron Kirk and Commerce Secretary Gary Locke also said President Barack Obama's team would keep a close eye on recent steps by China to reform its currency.
"My colleague, Treasury Secretary Timothy Geithner, will be closely monitoring how far and how fast the Chinese let their currency appreciate and will continue to raise this issue with Chinese officials," Locke said.
Locke also said the Commerce Department was carefully considering requests to apply "countervailing duties" against China's currency in two cases now before the Department involving paper and aluminum products.
"Given the scrutiny that such decisions face in U.S. courts and at the WTO, I want to make sure our decision on whether to investigate is warranted by the facts and the law," Locke said, referring to the World Trade Organization.
A copy of both officials' prepared testimony was obtained by Reuters.
Under pressure from the United States and other trading partners, China announced over weekend that it was ditching a two-year peg to the dollar to allow more flexibility in its closely managed exchange rate.
The Obama administration welcomed the action, but many members of Congress viewed it with suspicion and complained that China's exchange rate remains undervalued by 25 percent to 40 percent.
Reflecting that concern, a group of lawmakers on Wednesday demanded a vote on a bill that would require the Commerce Department to treat undervalued currencies as an unfair export subsidy so companies could seek countervailing duties.
"America cannot keep relying on more empty promises from China," said Representative Tim Murphy, a Republican, at rally with labor and manufacturing groups to push for the bill.
Representative Tim Ryan, a Democrat, said he believed "grass roots" pressure would mount until there is a vote on the bill, which already has more than 120 sponsors in the 435-member House of Representatives.
Neither Locke nor Kirk dwelt on the currency issue in their prepared remarks, since traditionally only the president and Treasury secretary speak about currency matters.
But both cabinet officials felt free to speak about Chinese policies they said unfairly favor Chinese companies at the expense U.S. and other foreign firms.
"We have serious concerns about new Chinese industrial policies that limit market access or otherwise skew the playing field in our trading relationship," Kirk told the panel.
The United States hopes for progress on those concerns by a meeting of the U.S.-China Joint Commission on Commerce and Trade near the end of this year.
But Washington is prepared to go to the World Trade Organization or take other enforcement actions "when dialogue fails," Kirk said.
Locke, who led a group of U.S. clean energy companies on a trade mission to China last month, said he shared the concern of many American companies that China was backsliding on its commitment to market openness.
"Far more needs to be done before we can be sure that commercial trends affecting U.S. business in China are once again headed in the right direction," Locke said.
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