Friday, October 1, 2010

China Currency Bill Passes House, Senate Vote Planned for November

(World Trade Interactive)

The House of Representatives approved by a 348 to 79 vote Sept. 29 the Currency Reform for Fair Trade Act (H.R. 2378), which would allow an undervalued foreign currency to be considered a government subsidy that can be offset with countervailing duties on imports of specific goods from the offending country. A related bill in the Senate could be voted on after the congressional elections in November. The White House has not taken a position on either bill but acknowledged this week that the House action highlights the importance of this issue.

Supporters of H.R. 2378 say it will help reduce the U.S. trade deficit with China and boost domestic manufacturing employment, both issues projected to score well with voters still concerned about the struggling economy. Several key lawmakers said this week that one of the objectives of moving the bill forward is to give the Obama administration more leverage in its unilateral and multilateral efforts to convince China to let its currency appreciate. In recent weeks the president and Treasury Secretary Timothy Geithner have both pressed Chinese leaders more than ever on this issue, but Beijing has maintained its position that it will manage the yuan according to China’s interests and not outside pressure. Read more here.