Paulson says China needs to get moving

Paulson says China needs to get moving

	Published : Wed, 06 Jun 2007 08:50 By : Agencies Print this Story

WASHINGTON (AP) - Treasury Secretary Henry Paulson said Tuesday that China should understand that progress is needed on trade reforms to fend off protectionist legislation in Congress.

Speaking at the conservative Heritage Foundation, Paulson defended the second round of high-level U.S.-China economic talks against criticism that it produced no breakthroughs on such key issues as currency reform or copyright piracy.

He said the discussions held two weeks ago in Washington had produced 'tangible results that have laid the groundwork for greater progress' when the two sides meet in China in December. They have agreed to hold these discussions twice a year in an effort to relieve growing trade tensions as the U.S. deficit with China has swollen to record levels.

Paulson said the administration would like to see China move faster to allow its currency to rise in value against the dollar and step up efforts to crack down on piracy of American copyrighted products in part because such efforts would make it easier to fend off rising demands in Congress to impose economic sanctions on China for what critics see as unfair trade practices.

'I believe that the more progress they make in going beyond (their World Trade Organization commitments) in opening up their markets for competition, the easier it will be for me to fight the battle I have to fight to keep our markets open,' Paulson said.

The Chinese delegation met with key members of the House and Senate during their trip, but afterward various lawmakers said they still planned to push forward with legislation that could impose penalty U.S. tariffs on Chinese imports.

One of the major bills last year would have slapped 27.5 percent tariffs on Chinese imports unless the Chinese moved faster to allow their currency to rise in value.

American manufacturers contend that China's currency is undervalued by as much as 40 percent, making Chinese goods cheaper for American consumers and U.S. products more expensive in China.

Opponents of the penalty tariffs said it would drive up the cost of products for U.S. consumers while doing little to deal with America's huge trade deficit with China, which last year hit an all-time high of $232.5 billion.

Sen. Charles Schumer, D-N.Y., one of the sponsors of last year's tariff bill, has said he is working on a modified proposal that would be compatible with World Trade Organization rules. He is holding discussions with Senate Finance Committee Chairman Max Baucus, D-Mont., and Sens. Charles Grassley, R-Iowa, and Lindsey Graham, R-S.C., to come up with new legislation.

That bill, which is expected to be introduced in the next couple of weeks, would join a number of other measures, including one sponsored by Reps. Tim Ryan, D-Ohio, and Duncan Hunter, R-Calif., that would define currency manipulation as an unfair trade subsidy which could be targeted with U.S. sanctions.

In his remarks, Paulson said that the Chinese need to understand that the supporters of free trade are 'swimming against a strong protectionist tide these days.'

'As I explained to the Chinese, a large section of the American public doesn't believe that the benefits of trade are being shared equally between or within our two countries,' he said. 'Congress reflects that view.'

In response to questions, Paulson said the United States was trying to enlist the support of other members of the Group of Seven major industrial countries to present a united front to lobby China.

'Every conversation I have had at the G-7 ... we bring this up,' Paulson said. 'If I look at it cynically, I would say that some nations talk about it at the G-7, but when they go to China, then it's a trade mission and they are just signing deals.'