MAC.TV News: As China President Visits, Dollar Protection Bill Resurfaces at Congress

February 10, 2011

By Williams Ekanem

Barely one week to the visit of  China’s President Hu Jintao's visit to Washington, plans by the United States Congress to pass a bill protecting the dollar from devaluation got a boost Thursday with the introduction of the Currency Reform Trade Act.

On the floor on Thursday, Congressman Tim Ryan introduced the bill and was supported by Sander Levin (D-12) together with 100 Democrat and Republicans as co-sponsors.

The Currency Reform for Fair Trade Act (H.R. 2378), sponsored by Congressman Ryan and Congressman Tim Murphy (R-PA), was first  introduced in the 111th Congress.  It passed the House by a vote of 348 to 79, with a majority of both parties.

Commenting on the essence of the proposed legislation, Representative  Ryan said, “this legislation will provide tremendous relief to our manufacturers.  China’s unfair trade policies have destroyed millions of good-paying American jobs, and jeopardized the future of the American middle-class.  We can no longer expect domestic companies to compete against a country that flouts international trade laws,”

 

According to the Congressman, “Manufacturing is the foundation of our economy, and we need to increase the manufacturing base in the U.S.  For every manufacturing job that is created, up to six additional jobs are spun off.  It is the duty of this Congress to move forward with currency reform legislation and continue to fight on behalf of American jobs and our manufacturing industry.”

Economic analysts say the  bill would clear the way for the Commerce Department to treat undervalued currency as a subsidy under U.S. trade law. That would allow companies, on a case-by-case basis, to seek higher countervailing duties against imports from China that compete with U.S. production.

Despite the strong House vote, the Senate failed to take up the measure and it died at the end of last legislative year.

The bill faces tougher going in the House now that Republicans control the chamber. However, supporters remain hopeful Congress will act if China doesn't take steps to allow its currency to rise more quickly against the dollar.

Critics saying China's yuan is undervalued by 15 percent to 40 percent against the U.S. dollar, giving Chinese companies an unfair trade advantage.

Many U.S. lawmakers believe China keeps the yuan undervalued by 15 percent to 40 percent to give its companies an unfair price advantage in international trade. They hope President Obama, a Democrat, will pressure his Chinese counterpart over the issue during Hu's state visit January 19, 2011.

Historically, Republicans have tended to be less protectionist than Democrats. "Threatening protectionist trade practices isn't a pathway toward restoring the American economy," one influential House Republican, Representative Mike Pence, told Reuters last week.

Treasury Secretary Timothy Geithner served notice on Wednesday that the United States was unsatisfied with the extent of the yuan's has risen since Beijing introduced a more currency flexibility policy in June.