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Sat, Oct 15, 2005 - Page 12 News List

US group urges action on yuan

FED UP A hodgepodge of labor and industry groups has joined forces to call on the US Congress to take tougher measures against China's `illegal' currency policy


A US coalition of industry, agriculture and worker groups urged Congress on Thursday to push ahead with legislation labeling China a currency manipulator as part of tough measures against Beijing for maintaining what it called an undervalued yuan.

The 40 groups also urged President George W. Bush's administration to accuse China of currency manipulation in an upcoming Treasury Department report, a move that would require direct consultations with Beijing and could lead to new trade restrictions.

David Hartquist, an international trade attorney and spokesman for the coalition, told a news conference that a growing number of lawmakers were backing the proposed legislation, known as the Chinese Currency Act, which would classify currency manipulation as a prohibited export subsidy.

"There are more Republicans sponsoring the bill than are Democrats. It's a growing number everyday," he said.

Several lawmakers from Bush's Republican party have argued strongly for aggressive steps against China on the currency issue.

US Treasury Secretary John Snow is currently in China and is expected to meet Chinese leaders to push for a looser yuan, which US manufacturers claim is so cheap that it offers Chinese exporters an unfair edge. Snow's office is scheduled to release next month its semi-annual report on which nations manipulate their currencies for trade advantage.

"As a first step, the government should recognize the problem of currency manipulation by China," said Doug Bartlett, co-chairman of the Chinese Currency Coalition.

"It is the only chance we have to offset the unfair trade rules being levied by the Chinese government," he said.

Richard Trumka, secretary-treasurer of the AFL-CIO, the biggest US labour group, said legislation would "provide US manufacturers and the executive branch with more effective WTO-compliant tools to combat the Chinese government's illegal currency manipulation."

Legislators say the proposed Chinese Currency Act is in compliance with the international legal obligations of the US at the World Trade Organization (WTO).

The bill would simply amend existing US trade law to make currency manipulation an unfair trade practice, enabling any industry that feels hurt by such a practice to raise the case with the International Trade Commission.

The commission is a quasi-judicial governmental body with jurisdiction over whether a US industry is harmed or threatened by imports.

Experts feel China's yuan currency is undervalued by about 40 percent, Trumka said.

After months of intense US pressure, China freed the yuan from an 11-year-old peg to the US dollar in July, revaluing it by 2.1 percent and putting it in a trade-weighted basket of currencies. The yuan was also allowed to move 0.3 percent either way on any given day.

Since then, however, the yuan has barely budged.

The administration is facing increasing political pressure to get tougher with the Chinese in order to deal with a US trade deficit with China that hit an all-time high of US$162 billion last year and could set another record this year.

In the absence of a significant appreciation of the yuan, the deficit would rise by 27 percent to hit US$206 billion this year, officials of the coalition forecast.

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