[CTC] Obama Officials Start Trans-Pacific Partnership (TPP) Talks - First Obama Trade Deal? (4 pager)

Tue Mar 16 15:29:24 PDT 2010

U.S. lawmakers press for action on China currency

Mon Mar 15, 2010 

 <http://www.reuters.com/article/idUSN1522417020100316?type=usDollarRpt>
http://www.reuters.com/article/idUSN1522417020100316?type=usDollarRpt 

By Doug Palmer

* 130 lawmakers write letter to Geithner, Locke

* Say failure to act on China will hurt economic recovery

* White House says Sino-U.S. ties good; some differences (Updates to note
senators' news conference on Tuesday)

WASHINGTON, March 15 (Reuters) - President Barack Obama faced growing
congressional pressure on Monday to get tough with China over its currency
practices, one day after Chinese Premier Wen Jiabao brushed off accusations
that Beijing was undervaluing its currency for an unfair trade advantage.

"The impact of China's currency manipulation on the U.S. economy cannot be
overstated. Maintaining its currency at a devalued exchange rate provides a
subsidy to Chinese companies and unfairly disadvantages foreign
competitors," 130 lawmakers said in a letter to U.S. Treasury Secretary
Timothy Geithner and Commerce Secretary Gary Locke.

House of Representatives Ways and Means Committee Chairman Sander Levin
announced his panel would hold a hearing on March 24 to examine the impact
of China's exchange rate policy on the U.S. and global economic recoveries
and on U.S. job creation as well as "steps that could be taken to address
the issue."

Senator Charles Schumer, a member of the Senate Democratic leadership, and
Senator Lindsey Graham, a South Carolina Republican, have set a news
conference on Tuesday to discuss legislation to prod China on the currency
front.

Many economists estimate China's currency is undervalued by 25 percent to 40
percent, giving it a huge trade advantage by effectively subsidizing its
exports and taxing its imports.

Wen on Sunday dismissed U.S. complaints about China's exchange rate, calling
them counterproductive and saying he did not believe the country's currency
was undervalued.

He also blamed Washington for a deterioration in U.S.-China ties because of
U.S. weapon sales to Taiwan and Obama's meeting with Tibet's spiritual
leader, the Dalai Lama, last month.

The White House said relations between the United States and China were in
"good shape" but acknowledged some differences between the two countries.

But the lawmakers' letter showed the pressure Obama faces to push China to
revalue its currency, which many U.S. lawmakers believe is to blame for lost
manufacturing jobs and the huge U.S. trade deficit with China.

"If the administration fails to act on this issue it will hold back our
economic recovery and hurt the ability of American small businesses and
manufacturers to increase their production, keep their doors open, and
create jobs," said Representative Michael Michaud, a Democrat.

White House adviser Jeff Bader said China's rising influence in the
Asia-Pacific region would be on the agenda during Obama's trip to Indonesia
and Australia next week.

"We're also looking to reshape the international regulatory system through
the G20 in a way ... that new actors such as China are acting consistently
with international norms," he said when discussing coming talks between
Obama and Australian Prime Minister Kevin Rudd.

CURRENCY MANIPULATOR LABEL

A few years ago, Schumer and Graham offered legislation threatening to hit
China with a 27.5 percent tariff unless it raised the value of its currency
to address U.S. concerns.

Schumer and Graham are working this time with Senators Debbie Stabenow and
Sherrod Brown, two Democrats who have been pressing for action on China's
currency for years.

In their letter on Monday, lawmakers in the House of Representatives urged
the Commerce Department to make a major policy change and agree to impose
countervailing duties on a case-by-case basis against countries that
manipulate their currency for an unfair trade advantage.

The department is already considering that possibility in a case involving
coated paper imports from China.

The lawmakers also demanded the Treasury Department formally label China as
a currency manipulator in an April 15 report on the currency practices of
major trading partners.

Representative Tim Ryan, a Democrat, said in the letter that Obama should
work with the International Monetary Fund and other countries to pressure
China to revalue its currency.

If that pressure fails, they urged, the Obama administration officials
should consider filing a complaint against China under the World Trade
Organization.

Although Beijing has emerged from the global financial crisis more confident
than ever, Dewey & LeBoeuf trade lawyer Alan Wolff said the "gold rush
atmosphere" following China's entry into the WTO in 2001 has faded among
governments and companies after years of tolerating discriminatory Chinese
policies in the hope of winning market access.

"I think one is going to see a reexamination of China policy in a number of
capitals," Wolff said. (Additional reporting by Matt Spetalnick, Ross Colvin
and Paul Eckert, Editing by Kenneth Barry, Gary Hill)

Andrew Gussert
Director, Citizens Trade Campaign
1150  17th  Street N.W., Suite 300
Washington, D.C.  20036

Cell#:  202.494.8826
Fax#:  202.293.5308
 <http://www.citizenstrade.org> www.citizenstrade.org

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