OUTLOOK US expected to stop short of labelling China currency manipulator

OUTLOOK US expected to stop short of labelling China currency manipulator

	Published : Tue, 12 Jun 2007 18:13 By : Agencies Print this Story

WASHINGTON (Thomson Financial) - Despite growing trade tensions between the US and China, the Bush administration is not expected to label China as a currency manipulator in its semi-annual report on foreign exchange regimes due out tomorrow.

Instead, most industry observers expect the Treasury to maintain its previous position that it cannot meet the technical hurdles needed to point the finger at China.

Even a vocal lobby group does not expect any change in the general tone. 'I have no expectation of anything different from the past,' said Skip Hartquist, counsel to the China Currency Coalition.

In past reports, Treasury said the balance of proof is high before it can make outright accusations. The Treasury has said repeatedly that it cannot prove intent.

US auto makers have been lobbying the Treasury to label Japan as a country that manipulates the value of its currency in order to benefit its exporters. The yen, however, is a freely traded currency.

The release of Treasury's report will prompt four key senators to introduce legislation in the afternoon of June 13 aimed at addressing congressional complaints about undervalued currencies of China and Japan. The contents of this bill are still secret, but most industry observers believe it will put more pressure on the administration to bring a World Trade Organization case against China over currency.

'The Senators will discuss the new U.S. responses their bill requires when other nations, including China, unfairly undervalue their currency,' according to a June 11 Senate Finance Committee statement. 'Fundamentally misaligned currencies distort global markets and put U.S. manufacturers and farmers at a competitive disadvantage.'

The bill may also aim to change US law to require the US to accept anti-subsidy cases against non-market economies like China.

In an apparent bid to head off this legislation, the Commerce Department earlier this year accepted an anti-subsidy case against China involving imports of glossy paper, which represented a change in Commerce policy dating from the early 1980s.

Commerce department's preliminary finding in that case calls for anti-subsidy duties of up to 10 percent on these imports.

Another anti-subsidy case against imports of steel pipe from China was filed last week, and observers have said many more are in the pipeline.

Leaders of the Senate Finance Committee have been working on the Senate bill since earlier this year, along with Sen. Charles Schumer (D-NY) and Lindsey Graham (R-SC).

Schumer and Graham last year threatened to move a bill imposing a 27.5 pct tariff on imports from China as a way of retaliating over currency, but agreed to drop that bill in order to work with Senate Finance on a bill that is consistent with WTO rules.

pete.kasperowicz@thomson.com

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