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3 US Reps Renew Bill To Punish China For Forex Policy January 9, 2007

Posted by notapundit in Congress, Politics, US News.
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WASHINGTON (Dow Jones)–Three Republican congressmen Tuesday reintroduced legislation requiring tariffs on imports from China in retaliation for that country’s currency policy.

Reps. Phil English, R-Penn., Robin Hayes, R-N.C., and Thomas Reynolds, R-N.Y., are backing a bill that would require Treasury to impose an automatic tariff on Chinese goods if the government is manipulating its currency to boost exports. Manipulation is defined as “large-scale and protracted intervention in one direction to gain an unfair trade advantage,” according to a joint statement from the House members.

China is accumulating roughly $20 billion worth of U.S. currency each month as it purchases dollars to control the rate of appreciation of its yuan.

“Congress has stood by too long while the administration has failed to produce real change in policy by China,” English said. English first introduced a version of the bill four years, which he has named the Currency Harmonization Initiative through Neutralizing Act, or CHINA.

Hayes said China’s currency policy has hurt the U.S. textile industry, once a major employer in his home district.

China controls the value of its yuan against a basket of currencies within a tight trading band through currency market intervention. U.S. manufacturers argue that the government is keeping its currency artificially weak to promote exports. In recent months, China has allowed the yuan to appreciated at a slight faster rate, but not fast enough to mollify critics in Congress.

English, Hayes and Reynolds noted that the U.S. Treasury Department has refused to cite China as a currency manipulator in its semi-annual report to Congress on foreign exchange. Treasury Secretary Henry Paulson, and former Secretary John Snow before him, have argued that diplomacy is the most effective route to getting China to adopt a more market-based currency system.

During the last session of Congress, legislators introduced several proposals to reform the currency report and laws for addressing friction over currency policy between the U.S. and its trading partners. The issue is likely to remain high on the congressional agenda this year.

English’s bill would also urge the administration to fight currency manipulation through U.S. anti-subsidy laws and procedures for filing complaints.

By Elizabeth Price, Dow Jones Newswires

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