–Senate Majority Leader Says China Is ‘Manipulating’ Currency
–Hope Bill ‘Will Motivate China To Stop Devalauing Yuan’
–Hope Senate Passes Senate FX Bill This Week
–Sen. McCain Slams Dems For Bringing Up Currency Bill

By John Shaw

WASHINGTON (MNI) – Senate Majority Leader Harry Reid said Monday he
expects the Senate to formally vote this evening to begin debate on
currency legislation that is largely directed at China.

“I expect strong bipartisan support to move this legislation
forward,” Reid said in comments on the Senate floor.

“Both Democrats and Republicans agree that China’s deliberate
actions to devalue its current give their goods an unfair competitive
advantage in the marketplace. Their goods do not deserve that. That’s
not fair. It hurts our economy. It costs American jobs,” Reid said.

The Senate will vote Monday evening at 5:30 p.m. ET on a motion to
begin debate on the currency bill.

Reid said he hopes the bill “will motivate China to stop devaluing
the yuan on its own.”

Reid said he expects the Senate to “wrap up work on the China
currency (bill) quickly this week.”

Sen. Chuck Schumer, one of the main sponsors of the bill, has said
he is confident the bill will pass the Senate easily and predicted
Senate passage would give the bill a boost in the House.

The Senate legislation requires Treasury to develop a biannual
report to Congress that identifies two categories of currencies: a
general category of “fundamentally misaligned currencies” based on
objective criteria and a smaller group of “fundamentally misaligned
currencies for priority action” that reflect misaligned currencies
caused by clear policy actions by the relevant government.

The bill would automatically threaten economic sanctions if the
Treasury Department finds that a trading partner’s currency is
“misaligned” due to intentional policy actions of a government. In the
past, Treasury has steadfastly declined to label China a currency
manipulator.

Under the Senate 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.

Sen. Orrin Hatch, the ranking Republican on the Senate Finance
Committee, sent a letter to Treasury Secretary Tim Geithner and U.S.
trade representative Ron Kirk last week calling on the administration to
spell out its view on the China currency bill by Monday evening.

House Republican leaders have expressed skepticism about
legislation directed at China’s currency regime, arguing it takes a too
narrow approach to the U.S. trade relationship with China.

House Majority Leader Eric Cantor declined to say earlier Monday if
the House would take up currency legislation, but he hinted he is
unlikely to.

Speaking after Reid, Republican senator John McCain said the Senate
has more pressing matters to consider than the currency bill, including
fiscal year 2012 spending bills and the defense authorization bill.

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

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