Senate considers punishing China for undervaluing currency
October 4, 2011-- Furniture Today,
WASHINGTON — A battle is brewing in Washington involving proposed legislation that would punish China for undervaluing its currency.
The Senate voted on Monday to move forward with S. 1619, which would reinforce the U.S. Department of Commerce's ability to investigate alleged Chinese government subsidization of industry and to determine the magnitude that the Chinese government is manipulating its currency, the yuan.
It also would address alleged shortcomings in the U.S. Treasury Department's exchange rate oversight.
Officials said the bill also seeks to use countervailing and antidumping duties as leverage to pressure China into letting its currency float more freely.
The bill was introduced by Senators Sherrod Brown (D-Ohio), Lindsey Graham (R-S.C.), Olympia Snowe (R-Maine), Debbie Stabenow (D-Mich.), Jeff Sessions (R-Ala.), Robert Casey (D-Pa.) and Richard Burr (R-N.C.).
The goal is to support domestic producers whose businesses are challenged by unfairly priced imports.
"China's dilatory stance on illegal currency undervaluation reinforces the need for the Senate to act promptly," the Washington-based Fair Currency Coalition said in a statement. "While China refuses to honor its World Trade Organization commitments, millions of American jobs lost to subsidized Chinese competition have gone unrecovered, and the U.S. debt continues to soar. American businesses, farmers, and workers cannot afford more delay. They need action now by the U.S. government to stop currency undervaluation."
The groups attached a petition in support of the bill that was signed by 129 national and state business, labor and agricultural groups and 333 companies from 40 states.
Late Monday, however, the National Retail Federation fired back a rebuttal, saying that the measure threatens U.S. jobs.
"This misguided legislation could turn out to be the opening salvo in a trade war with China," NRF Vice President and International Trade Counsel Erik Autor said in a statement. "The gains in jobs that could be seen are minimal at best, and billions of dollars in trade and employment at American companies that do business with China would be put at risk. It would do nothing to reduce the trade deficit because trade would simply move to other Asian countries."
The NRF believes the yuan should float more freely. However, it believes the issue should be handled through more diplomatic channels. It also believes the legislation could have a detrimental effect on other industries already selling into China.
"This legislation would likely violate World Trade Organization rules, allowing China to retaliate against U.S. companies doing business in China," Autor added. "China could take official moves such as challenging the United States at the WTO, filing trade actions against U.S. exports, or unofficial moves such as slowing down license applications or buying Airbus jetliners rather than Boeing."
On Monday evening, the Senate voted 79 to 19 on a procedural measure that would move the bill into more formal discussions in the Senate.
Related Content By Author
China’s economy, CARB update, Overstock insights and a “cheeky” bet