–Champions of Currency Bill Say China’s Latest Announcement Not Enough
–GOP Rep. Murphy: Should Pass Currency Bill ‘Immediately’
–Democrat Rep Ryan: China Forex Reform Needed to ‘Level Playing Field’

By John Shaw

WASHINGTON (MNI) – The authors of a House currency bill largely
directed at China’s foreign exchange regime said Wednesday they will
push ahead with their legislation even in the aftermath of conciliatory
comments by Beijing.

At an outdoor briefing on a sweltering summer day, Republican
congressman Tim Murphy and Democratic congressman Tim Ryan said their
plans to push the currency bill are still necessary despite China’s
recent commitment to gradually revalue the yuan.

Ryan said China’s weekend announcement was “too little, too late.”

China, he said, should “play by the same rules as everyone else.”

A more fairly valued Chinese currency would “level the playing
field” between American and Chinese firms, Ryan said.

Murphy also said China’s new currency steps should not deter their
legislative strategy.

“We need to pass this bill immediately,” Murphy said.

Murphy and Ryan said they have 120 co-sponsors for their
legislation in the House. There is a companion bill in the Senate
co-sponsored by Senators Chuck Schumer and Lindsey Graham.

The bill would compel Treasury to report to Congress biannually on
what 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.

A number of experts have argued that using countervailing duty and
anti-dumping measures to punish China for its exchange rate policies
would be ruled illegal by the WTO.

Even this legislation, if enacted, would be far less draconian than
the bill Schumer drafted in 2005 that would have imposed a 27.5%
retaliatory tariff on Chinese imports if China failed to significantly
revalue its currency.

But its far from clear that either the House or Senate will pass a
currency bill this year given a packed agenda, a limited congressional
calendar and likely administration opposition.

The Senate Finance Committee will hold a hearing Wednesday at 2:30
p.m. on the U.S.’s economic relationship with China. Commerce Secretary
Gary Locke and U.S Trade Representative Ron Kirk will testify.

The Finance panel held a hearing two weeks ago on the U.S.-China
relationship, with Treasury Secretary Tim Geithner who said then that he
had seen few tangible signs that China is committed to short-term
currency reform

The Senate Foreign Relations Committee will also hold a hearing
Wednesday at 2:30 p.m. on the U.S.-China relationship, focusing on both
strategic and economic issues.

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

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