Beijing - AFP
The US Senate will move forward next week with a bill to punish China over its alleged currency manipulation, Democratic Majority Leader Harry Reid said Monday, predicting the legislation will pass. "China trade is a jobs bill that's been long, long overdue. It's a bipartisan bill and I feel very comfortable we're going to pass it," Reid told reporters at a press conference, using shorthand for the proposal. Reid said that "next week" the Democratic-led chamber will "start our work on trade matters" including the legislation on China's currency, though it was unclear when the bill would come to a final vote. The measure aims to make it harder for the US Treasury Department to avoid labeling Beijing a currency cheat, triggering various sanctions, while making it easier for US companies to seek retaliatory tariffs on Chinese goods. Senators unveiled the bill last week amid deep anger at stubbornly high US unemployment of over nine percent, with the sour economy the top issue on voters' minds as the race to the November 2012 elections heated up. But its fate is unclear: The White House opposes it, and Republican leaders in the House of Representatives have no plans to bring similar measures to votes in that chamber, according to a leadership aide. The bill, which has support from several key Democrats and Republicans, would empower US businesses and, in some cases, labor unions to trigger a US Commerce Department investigation into alleged currency manipulation. It also rewrites the law to make it harder for the US Treasury Department to stop short of declaring China a currency manipulator and makes manipulation punishable with countervailing duties on the offending country's goods. And the bill aims to restrict the White House's ability to waive the resulting sanctions, notably by requiring reports to Congress detailing how the adverse of taking action outweigh the benefits. An army of 51 US industry groups this week stepped up efforts to block such legislation, warning in a letter to senators that it could spark a "counterproductive" trade war. But a study released this week by the left-of-center Economic Policy Institute found that the US trade deficit with China has eliminated or displaced nearly 2.8 million jobs since 2001. And US lawmakers have increasingly criticized Beijing on other economic issues, including rampant intellectual property theft like pirated movies and "indigenous innovation" policies that favor Chinese businesses. In late 2010, Obama himself said in the heartland state of Iowa that the yuan was "undervalued" and was "a contributing factor" to the yawning US trade deficit with China. In May 2011, however, the US Treasury Department declined in a formal report to brand Beijing a currency manipulator. China has a history of allowing the yuan to strengthen slightly when it expects to come under heightened pressure over the value of its currency. China's leaders "get away with economic murder" by keeping the yuan, and thereby the country's exports, artificially cheap, Democratic Senator Chuck Schumer, a key backer of the bill, charged last week. Schumer, his party's number three in the Senate, said Obama opposed the measure but predicted "China will change its own behavior once this bill passes the Senate" in a vote expected in October. Schumer, asked why he felt optimistic about the measure given the failure of similar bills since 2005, replied: "Just wait and see. This one's coming up and it's going to pass and it's going to send a shot across China's bow." The Obama administration had no immediate comment on the bill.