Senate pressures China on currency
By Felicia Somnez,
The Senate on Tuesday approved a bill that would pressure China and other countries to allow the value of their currencies to rise — a move that supporters say would create American jobs but that both the White House and House Republican leaders have warned could lead to a trade war.
The White House has expressed concern that the legislation could disrupt delicate trade negotiations. Most Senate Republicans voted against the bill, and House GOP leaders have declined to bring it up for a vote.
House Majority Leader Eric Cantor (R-Va.) said the White House must first formally make its position known.
“I would like to hear from those who are on the front line of this relationship with China what the concerns are,” Cantor said. “It would seem to me that it’s a big deal when you’re talking about a trading partner like China, if you do this without the input of the White House.”
On its Web site Wednesday, the People’s Bank of China said that it firmly opposes U.S. the bill and that it would seriously hurt trade relations. The statement was first reported by Bloomberg News.
China has allowed its currency to gradually increase in value over the past six years, but proponents of the Senate measure argue that is not enough. Economists estimate that the yuan is undervalued by between 15 and 38.5 percent. An artificially weak yuan makes Chinese goods less expensive, which hurts American exports. By some estimates, the weak yuan has cost the United States more than 1.6 million jobs.
Several rank-and-file House Republicans have in recent days said they would support consideration of the China currency bill but described themselves as hesitant to buck their leadership.
President Obama said last week that he had spoken with Senate leaders about his concerns regarding the measure, which he called “symbolic.”
“Whatever tools we put in place, let’s make sure that these are tools that can actually work, that they’re consistent with our international treaties and obligations,” Obama said.
The measure would require the U.S. Treasury to impose retaliatory tariffs on countries found to have “misaligned” currency, even if there is no proof that the misalignment was due to manipulation. Treasury routinely issues reports concluding that China has undervalued its currency but has declined to conclude that the valuation was the result of manipulation.
The Senate approved the measure on a bipartisan 63 to 35 vote. Voting “yes” were 46 members of the Senate Democratic caucus, as well as 17 Republicans. Voting “no” were 30 Republicans and five members who caucus with Democrats. Two members — Sen. Tom Coburn (R-Okla.), who was recovering from surgery, and Sen. Jeanne Shaheen (D-N.H.), who was on her way back to Washington — did not vote.
Sen. Charles E. Schumer (D-N.Y.), one of the measure’s sponsors, said Tuesday night that House leaders should immediately put the bill up for a vote.
“The Senate has put the Chinese on notice: Stop your cheating that is costing our country jobs or you will face the consequences,” Schumer said in a statement after Tuesday’s vote. “We believe the momentum from the Senate vote now leaves the House no choice but to act on this bill.”