–House To Consider Narrow Currency Bill; Bipartisan Support Expected
–House Vote Expected In Early Afternoon
–Currency Bill Was Approved Last Week By Ways and Means Committee
–Senate Not Expected To Take Up Currency Bill Before Election
–Senate, House May Pass Stop-Gap Spending Bill Later Wednesday

By John Shaw

WASHINGTON (MNI) – The House will take up a narrow currency bill
Wednesday and passage is expected in the early afternoon with strong
bipartisan support.

If the House does approve the bill, it will be sent to the Senate
which is not expected to consider the legislation before leaving
Washington later this week for the mid-term elections.

The bill the House will consider would clarify current law to allow
the Commerce Department to impose countervailing duties on Chinese goods
to offset the effect of the country’s currency policies.

With the legislation, countervailing duties would be available to
any U.S. industry that could demonstrate it has been “materially
injured” by imports from the country with the undervalued currency.

Ways and Means Committee Chairman Sander Levin says the bill is
“fully consistent” with World Trade Organization rules.

WTO rules allow for the application of countervailing duties to
offset or neutralize export subsidies. So far the Commerce Department
has refused to find currency manipulation a countervailable export
subsidy for the sole reason that non-exporters, such as American
tourists in China, benefit from the undervalued currency as well.

Levin said the bill preserves the Commerce Department’s authority
to consider each case on its merits and to make a judgement as to
whether all the necessary legal elements of an export subsidy are met.

Levin and other lawmakers said the legislation is needed because
China has failed to follow through with its announced plans to implement
currency reform in June.

Since then, he said, China has allowed the RMB to appreciate less
than 2% against the dollar, adding that most of this appreciation has
taken place in the last several weeks.

Sen. Chuck Schumer, a leading Senate advocate of currency
legislation directed at China, said Tuesday evening that he will press
the Senate to take up a currency bill that he has drafted when it
returns to Washington for its Lame Duck legislative session in
mid-November.

In a speech on the Senate floor, Schumer blasted China for what he
called “overt and continuous manipulation of its currency,” and said
legislation is needed soon.

“This issue can’t wait for another year,” he said.

However, Schumer is calling on the Senate to take up a bill that is
different from the currency bill the House will vote on Wednesday.

So even if Schumer were able to get the Senate to pass a currency
bill after the election — hardly a sure thing — it would probably pass
a bill that is different from the House version.

Under this scenario, neither bill would be sent to President Obama
for his consideration,

Schumer is sponsoring legislation that would compel Treasury to
report to Congress biannually on which nations have “fundamentally
misaligned currencies” with the U.S.

If those countries, after having been identified by Treasury, do
not address this issue within 90 days, the administration would be
required to take action at the International Monetary Fund and end
federal procurement regarding these nations. After 360 days, the U.S.
Trade Representative would be required to request dispute settlement
proceedings at the World Trade Organization.

If the Commerce Department ruled that this currency imbalance
amounted to an impermissible subsidy, it could open the door to the
imposition of countervailing duties on Chinese imports on a
product-specific basis. It could also lead to anti-dumping remedies
being applied to products from China.

** Market News International Washington Bureau: (202) 371-2121 **

[TOPICS: M$U$$$,MFU$$$,MCU$$$,MI$$$$,M$Q$$$,M$$FX$,MGU$$$]