U.S. unions urge Congress to pass currency bill

By Reuters
Posted July 9, 2010 at 11:34 a.m.

The largest U.S. labor group urged Congress on Friday to pass legislation to fight China’s currency practices, a day after the Obama administration again declined to label Beijing a currency manipulator.

The United States should also keep other options on the table, including a possible challenge of China’s currency practices at the World Trade Organization, Richard Trumka, president of the AFL-CIO labor federation, said in a statement.

Trumka said the Treasury Department’s decision ignored “the overwhelming evidence, including that in Treasury’s own report, that the Chinese government has systematically intervened in currency markets over many years to keep the renminbi undervalued by as much as 40 percent.”

He urged Congress to act swiftly to pass a bipartisan bill backed by Senator Charles Schumer of New York and 18 other senators.

The Treasury Department, in a semiannual currency report released on Thursday, said China’s renminbi, also known as the yuan, remains undervalued but declined to formally label Beijing a currency manipulator, an action that would strain trade ties.

Treasury noted China made a “significant” move last month by ending a peg between the value of the yuan — also called the renminbi — and the dollar.

Import-sensitive U.S. sectors like steel and textiles also strongly back Schumer’s bill, but many business groups like the U.S. Chamber of Commerce and the U.S-China Business Council have urged Congress not to rush to action. “Since the June 19 announcement by China’s central bank, the renminbi has appreciated about 0.8 percent against the dollar — that pace is close to 20 percent annualized, which isn’t insignificant,” said John Frisbie, president of the U.S.-China Business Council. “That’s more movement than we expect to occur over the next 12 months, but let’s see how things evolve.”

After the report, Schumer reaffirmed his intention to push for a vote on his bill, which would open the door for the United States to use its antidumping and countervailing duty laws against China’s exchange rate.

With a relatively few weeks left on this year’s crowded congressional calendar, it’s unclear if a bill can reach Obama’s desk before Congress adjourns for the year in late September or October.

Many members of the House of Representatives also think legislation is needed.

“Forcing China to let its currency truly float is key to getting our economy on the right track, creating jobs, and rebuilding our manufacturing sector. If the administration will not act, it is imperative the Congress does,” said Representative Mike Michaud, a Democrat.

Senate Finance Committee member Orrin Hatch, a Republican, also criticized the Treasury Department’s finding as a “weak-kneed” response to an obvious problem for hard-pressed U.S. industry.

“It is beyond a reasonable doubt that China is manipulating its currency to put its employers at an unfair advantage over American companies,” he said.

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