US Senate to vote soon on China currency penalty bill

27 September 2011 22:21  [Source: ICIS news]

WASHINGTON (ICIS)--The US Senate may vote as early as next week on a bill to penalise China for what its bipartisan sponsors say is Beijing’s currency manipulation at the expense of US export sales and domestic jobs development, sources said on Tuesday.

Sponsored by Democrat Senator Sherrod Brown of Ohio, S-1619, the “Currency Exchange Oversight Reform Act”, would require the US Treasury Department to report annually on misaligned or undervalued currencies, and it would mandate retaliatory action by the White House against nations that fail to correct their monetary manipulations.

In addition to the annual review and report by the Treasury, the bill would allow US companies to bring a formal complaint before the Department of Commerce (DOC) and the US International Trade Commission (ITC) to allege currency manipulation by a foreign country.

If the agencies’ investigation confirmed the company’s allegations, the Commerce Department could impose countervailing duties against selected imports from the offending nation.

Similar legislation has been introduced since 2004 in both the House and Senate before but never has won approval of both chambers.

Brown and his 19 bipartisan cosponsors have combined elements of earlier bills that got majority support in either chamber into a single measure that in theory should find broad support among both parties in Congress.

Members of Congress and many among US industry have long complained that China has kept its currency, the yuan, artificially undervalued in order to make that country’s exports more competitive in the global marketplace.

An undervalued currency also benefits the manipulating country by making imports more expensive, consequently giving domestic producers another advantage over foreign competitors.

“How much longer is Congress willing to stand by and watch thousands of jobs move to China?” Brown said.

“We know that two million jobs hang in the balance when it comes to currency manipulation,” he said, adding: “It’s time to put American jobs and American workers first.

Senator Lindsey Graham of South Carolina, one of the Republican cosponsors of the bill, said that the yuan is “blatantly manipulated” and that “China’s actions are deliberate and are designed to give China a competitive advantage in the marketplace”.

Another cosponsor, Senator Charles Schumer (Democrat-New York), said that while the White House opposes the bill, “China’s history of half-truths and broken promises on currency makes passing this legislation an economic imperative”.

“There will be a bipartisan push to send this bill to the president’s desk this year,” Schumer added.

A companion bill was expected in the House within days.

Paul Hodges studies key influences shaping the chemical industry in Chemicals and the Economy

By: Joe Kamalick
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