–Senior Republican on Tax Panel Calls for Broader Engagement With China
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–Pressed Geithner on Oct. 15 Release of FX Report

By John Shaw

WASHINGTON (MNI) – If Republicans win control of the House in the
mid-term elections Nov. 2, the lawmaker poised to take control of the
powerful and pivotal House Ways and Means Committee has been
consistently skeptical about currency bills as a way of handling the
U.S. economic disagreements with China.

Rep. David Camp, the top Republican on the House Ways and Means
Committee and the man to poised to assume the panel’s chairmanship, has
been a tough critic of China’s economic policies, but has been decidedly
cool to focusing on currency legislation.

At a hearing by the Ways and Means Committee Sept 15, Camp chided
the Democratic majority for scheduling a hearing to deal with China’s
currency and not take a broader view.

“In focusing exclusively on China’s currency policy, this hearing
is a lost opportunity,” Camp said. “As significant as China’s currency
misalignment is, our problems with China are so much larger.”

He launched into a stinging bill of particulars against Chinese
economic policy which included an increase in non-tariff barriers, the
growing strength of state-owned firms, and “its woefully inadequate
protection of intellectual property.”

But he also argued that China’s currency is significantly
undervalued.

“While we shouldn’t obsess over the value of the RMB at the expense
of our other priorities, it would be an enormous mistake to give up
completely on addressing it,” he added.

Camp urged the administration to set up “high level bilateral
summits” to address the currency issue as well as leading a “robust
multilateral process” to press Chinese currency reforms.

He also said American fiscal policy has given China significant
leverage over the U.S.

“China wouldn’t be accumulating hordes of currency reserves and
U.S. Treasuries as it is now if the United States stopped racking up the
debt at the current unsustainable pace,” he added.

When the Ways and Means Committee met Sept. 24 to mark-up the
revised currency bill, Camp supported the measure, but added that the
U.S. needed a “broader trade agenda” with China and other nations.

The House later passed the currency bill directed at China on a 348
to 79 vote. Almost 250 Democrats voted for the bill and about 100
Republicans.

The bill approved by the House 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.

House Speaker Nancy Pelosi said the bill will provide President
Obama “greater leverage” in his dealings with Chinese leaders on
currency issues and the overall economic relationship.

During the floor debate, Camp said there is broad agreement in
Congress that China’s currency is undervalued.

“We all agree China’s currency is fundamentally misaligned,” Camp
said, but he then blasted the Obama administration and Congress for
pushing a limited trade agenda over the past two years.

“It’s disappointing this is the sum total of our agenda,” he said.

During a Ways and Means hearing Sept. 16 with Treasury Secretary
Geithner, Camp pressed Geithner hard on whether Treasury would issue its
foreign exchange report on Oct. 15.

Geithner said yes, adding the report would be issued in a “timely
manner.”

After hearing that Treasury officials maintained that Geithner had
not made a firm commitment to the Oct. 15 release, Camp told Market News
International that he would be very displeased if Geithner engaged in
evasive word games.

“I was very careful to ask him a point blank question and made a
point of mentioning to him the October due date. And he answered yes,
the report will come out then,” Camp said.

“I noticed that he then started to hedge, by using words like in a
“timely manner.” I decided not to ask him again. I decided to trust his
clear answer. The spirit of his answer was clear. I sure hope he isn’t
going to play games on this,” Camp said.

Camp said he wanted to secure a commitment from Geithner that the
next report will not be delayed for several months.

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

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