- The Washington Times - Thursday, April 7, 2005

ASSOCIATED PRESS

Congress for the second time in two days gave notice to both China and the Bush administration that it will take action if nothing is done about undervalued Chinese currency that gives Chinese goods an advantage over U.S. competition.

“We are playing by the rules. We think the Chinese government is cheating,” Rep. Tim Ryan, Ohio Democrat, said yesterday in promoting a bill that defines exchange rate manipulation as a prohibited export subsidy and sets guidelines for U.S. agencies to sanction China and protect U.S. industries.

Mr. Ryan was joined in sponsoring the bill by Rep. Duncan Hunter, California Republican, chairman of the House Armed Services Committee, who expressed concern that China was using the billions of dollars amassed from currency manipulation to buy advanced weaponry from Russia and other countries.

The bill also outlines steps to protect the U.S. defense industry from unfair Chinese competition.

On Wednesday, the Senate showed strong suapport for a proposal to place a 27.5 percent tariff on all Chinese products if China does not revalue its currency. The amendment to a bill authorizing State Department and foreign aid programs cleared a procedural obstacle on a 67-33 vote, but no vote was taken on the amendment itself.

The proposal — said Sen. Charles E. Schumer, New York Democrat, co-author with Sen. Lindsey Graham, South Carolina Republican — “says to the Chinese, ‘This is a shot across your bow. Reform, because if you don’t there are going to be dramatic consequences.’ ”

Mr. Graham and Mr. Schumer later said they had agreed to withdraw their amendment after receiving a written promise from Senate leaders that they would get a vote on their free-standing bill no later than July 27.

The administration has pressed China to let the yuan float against the dollar, but has declined to pursue trade action, saying it was preferable to negotiate with Beijing.

The Chinese currency has been set at about 8.28 yuan per dollar in the past decade, a rate that analysts say undervalues the yuan by up to 40 percent. That makes Chinese exports cheaper and drives up the cost of U.S. products sold in China.

Last year, the U.S. trade deficit with China reached $162 billion, more than one-quarter of the nation’s record overall trade deficit of $617 billion.

On Monday, the administration announced that it will bring trade cases against China to determine whether quotas should be re-imposed to protect textile and clothing manufacturers.

Mr. Ryan said that unlike other congressional attempts to impose sanctions on trading partners, they made sure their legislation complied with World Trade Organization rules.

“It is going to be very difficult for the president and the administration to blow this off,” he said.

Their legislation is supported by a coalition of business and labor groups, including the AFL-CIO and the U.S. Business and Industry Council.

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