Officials oppose bills pressuring China

Officials oppose bills pressuring China

	Published : Tue, 31 Jul 2007 22:03 By : Agencies Print this Story

WASHINGTON (AP) - The Bush administration said Tuesday it opposes two bills aimed at pressuring China to overhaul its currency system, saying the legislation could spark protectionist retaliation around the world.

Treasury Secretary Henry Paulson, Commerce Secretary Carlos Gutierrez and U.S. Trade Representative Susan Schwab argued in a letter to congressional leaders that two Senate bills could undermine the administration's efforts to get China to address issues that have contributed to a soaring trade deficit.

The United States could also be exposed to a 'a global cycle of protectionist legislation,' the Bush officials said.

'We recognize that many Americans are concerned that China's currency is undervalued and that the pace of economic reform is too slow, to the detriment of American businesses and workers. We share this concern,' the officials said. 'However, these bills will not accomplish our shared goal of persuading China to implement economic reforms and move more quickly to a market-determined exchange rate.'

Paulson was scheduled to meet Chinese President Hu Jintao in Beijing on Wednesday as he wraps up a three-day trip designed to defuse congressional demands for sanctions against China. The administration hopes to show that China is moving more quickly to implement reforms as part of an effort to narrow last year's $233 billion trade deficit with China, the largest ever recorded with a single country.

The Senate Banking Committee is scheduled Wednesday to take up legislation sponsored by Committee Chairman Christopher Dodd, D-Conn., and Sen. Richard Shelby of Alabama, the top Republican on the panel.

Last week, the Senate Finance Committee approved by a 20-1 vote a measure sponsored by the leaders of that panel that would propose various punishments for countries with a 'fundamentally misaligned currency.'

The penalties in the Finance Committee bill, sponsored by Sens. Max Baucus, D-Mont. and Charles Grassley, R-Iowa, would include using the amount that the currency is undervalued to determine tariffs imposed in cases where countries are found to be selling products in the U.S. market at below fair value.

The Finance measure is also sponsored by Sens. Charles Schumer, D-N.Y., and Lindsey Graham, R-S.C., who last year were pushing a more draconian bill that would have imposed 27.5 percent tariffs on all Chinese imports if China did not move more quickly to revalue its currency.

American manufacturers contend the Chinese currency is undervalued by as much as 40 percent, giving that country a tremendous competitive advantage against U.S. products.

The legislation sponsored by Dodd and Shelby would direct the administration to pursue currency cases before the International Monetary Fund as a way of bringing international pressure to bear on China.

Both bills represent rising unhappiness in Congress over the United States' soaring trade deficit with China and the loss of more than 3 million manufacturing jobs since 2000.

The administration officials argued in their letter that the best approach for success was through continued use of the strategic economic dialogue which requires the two countries to hold two meetings a year to discuss economic issues. These high-level talks started last year in Beijing with the second session held in Washington in May.

'The best way to achieve results in through continued intensive dialogue and engagement with China bilaterally and through multilateral institutions,' the three officials said. In an effort to adopt a tougher stance, the administration this year has brought trade cases against China before the World Trade Organization.