Tags: Senators | Unveil | Bill | Pressuring | China | Currency

Senators Unveil Bill Pressuring China on Currency

Tuesday, 12 June 2007 12:00 AM

WASHINGTON -- The top Democrat and Republican on the Senate Banking Committee said on Tuesday they would introduce legislation giving the U.S. Treasury Department stronger tools to confront China's currency practices.

"A change in our currency manipulation policy is long overdue," Senate Banking Committee Chairman Chris Dodd, a Connecticut Democrat, said in a statement. "America's companies and workers deserve an opportunity to compete on fair terms with countries such as China."

Dodd and Sen. Richard Shelby, an Alabama Republican, announced their plans just one day before the U.S. Treasury Department releases a semi-annual report on foreign currency practices, which is expected to again stop short of formally labeling China a currency manipulator.

The two senators also beat senior members of the Senate Finance Committee to the punch. The top Democrat and Republican on that panel have scheduled a Wednesday afternoon press conference to unveil their own currency bill.

"I have long believed that China manipulates its currency, thereby giving it an unfair trade advantage. Although evidence gathered by the Treasury clearly supports this conclusion, Treasury has regrettably declined to label China a currency manipulator," Shelby said in a statement.

Many lawmakers believe China deliberately undervalues its currency by as much as 40 percent to give Chinese companies an unfair advantage in international trade.

The U.S. Treasury Department has pushed China to move to a more flexible market-oriented exchange rate policy, but has frustrated many lawmakers and manufacturers by refusing to label China as a currency manipulator.

Earlier on Tuesday, U.S. Treasury Secretary Henry Paulson said he still believed the best way to get China to move faster on currency reform was "through direct discussions and negotiations, not through legislation."

Dodd and Shelby said their bill would change the definition of currency manipulation to make it harder for Treasury to avoid making that finding for China.

Countries with a material global account surplus and a significant bilateral trade surplus with the United States would be classified as "currency manipulators, without regard to intent," they said.

The National Association of Manufacturers praised that provision in particular, since current law requires the Treasury Department to find a country is intentionally manipulating its currency for an unfair advantage.

However, the business group said it needed to further study the bill before deciding whether to support it.

The bill would also require a number of Treasury Department actions once currency manipulation is found. Those including developing a plan of action within 30 days that sets benchmarks and timeframes for the foreign trading partner to reform its currency practices.

It mandates U.S. action through the International Monetary Fund to pressure countries to end currency manipulation, and authorizes the Treasury Department to file a World Trade Organization case if "goals and benchmarks are not met within 9 months."

The legislation also creates a process for Congress to formally voice its disapproval if Treasury fails to cite a country for currency manipulation.

Other provisions would hold Treasury's feet to the fire in terms of pressuring China to open its financial services markets to more U.S. companies.

Senior Democrats in the U.S. House of Representatives have also said they plan to move currency legislation this year.

© reuters 2007. All Rights Reserved.

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WASHINGTON -- The top Democrat and Republican on the Senate Banking Committee said on Tuesday they would introduce legislation giving the U.S. Treasury Department stronger tools to confront China's currency practices. "A change in our currency manipulation policy is long...
Senators,Unveil,Bill,Pressuring,China,Currency
533
2007-00-12
Tuesday, 12 June 2007 12:00 AM
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