US Congress examines currency legislation
Updated: 2011-10-26 10:21
By Tan Yingzi (China Daily)
Some say trade deal with China could be affected if bill passes
WASHINGTON - United States government officials expressed reservations on Tuesday about the passage of a currency bill against China, which the Senate passed two weeks ago.
The House Ways and Means Committee examined the trade ties with China on Tuesday before the chamber considers bringing the bill to the voting floor.
Two senior officials from US Department of Treasury and US Trade Representatives attended the hearing to discuss a series of concerns on China's trade practice, including its currency exchange policies.
The Currency Exchange Rate Oversight Act would allow sanctions against China if the Treasury Department finds China is manipulating its currency, the yuan.
At the request of a US company, the Commerce Department investigates whether a foreign government is subsidizing its companies by deliberately undervaluing its currency and calculating duties on its imports accordingly.
"Some in Congress focus on legislation to address currency manipulation as if it were a silver bullet," the committee's chairman Dave Camp, R-Mich, said in his opening remarks.
"In doing so, they miss the many issues we have with China."
He said he expected the two officials to tell them what Congress should and should not do with regard to the economic relationship with China.
Lael Brainard, the Treasury Department's under secretary for international affairs and one of the two Obama administration officials present at the hearing, said the administration supports the goals of the Chinese currency bill, but some aspects of it may not meet international trade laws.
"Aspects of pending legislation ... do raise concerns about consistency with our international obligations and we are discussing these issues with members (lawmakers)," she said.
She told the committee that China's currency should rise faster, though it has appreciated more than 7 percent in the past 15 months and 40 percent in the past five years.
"In real terms considering the inflation rate, it has appreciated 10 percent (since last June)," she said.
The other official who spoke at the hearing, Deputy US Trade Representative Demetrios Marantis, told the panel that despite some challenges in the bilateral trade relationship, China has become more and more important to US exporters and businesses.
"In fact, since 2001, our exports to China have been growing faster than to any other major market in the world," he said.
China is the third largest export market for the US, with a total of $113 billion exports in 2010, according to the Office of the US Trade Representative.
Former US Treasury Secretary Henry Paulson said Tuesday that he did not think the currency bill is the right approach to address the issue.
"It's in China's best interest to reform and move to a market-determined currency that reflects economic conditions," he said after a speech on US-China economic relations at John Hopkins University in Washington.
"I don't believe that it's a right approach ... for one sovereign nation to essentially try to dictate to another and say, 'If you don't do this I'm going to threaten you with a punishment.' "
Though many Republicans joined the line in the Democratic-controlled Senate, the currency bill's prospect in the Republican-controlled House is uncertain.
Republican House Speaker John Boehner has called the bill "dangerous" and said it would trigger a trade war. He also suggested that he might not permit the legislation to be brought to a vote.
President Barack Obama has also expressed concern over the bill, which might violate World Trade Organization rules.
A recent survey shows that the exchange rate doesn't affect the competitiveness of US companies in China as they continued to experience a healthy market growth in China, with 80 percent of respondents reporting double-digit revenue growth in 2010.
Top challenges among companies surveyed include human resources, licensing barriers, restrictions on foreign ownership in many key industries, market access barriers for US services sector companies and intellectual property rights protection.
The exchange rate issue ranks 26th, five spots lowers than last year, according to the US-China Business Council (USCBC) annual member survey.
Eighty percent of 240 member companies surveyed by USCBC said their operations in China saw a double-digit growth and over 40 percent had a profit growth of more than 20 percent, the US-based council said in its 2011 China business environment survey.
The rapid growth of China's economy makes it an increasingly important market for the US companies even through the global economic downturn.
Lu Chang in Beijing contributed to this story.