- The Washington Times - Thursday, September 9, 2004

A coalition of organized labor and industrial groups yesterday asked the Bush administration to attack China’s currency policy at the World Trade Organization.

The China Currency Coalition said the country manipulates its exchange rate so that its currency is undervalued by about 40 percent, giving its exports an unfair advantage while pricing many U.S. goods out of its market.

The AFL-CIO labor federation, other labor groups, steel manufacturers, textile companies, machinists and industry associations filed the petition under a section of U.S. trade law.

The Bush administration has 45 days to formally accept or reject the petition, but this past spring the administration pre-emptorily renounced it and yesterday restated its opposition to a WTO case on currency.

“In April, the administration made it clear that accepting such a petition would be a retreat into economic isolationism. That is a path we would not take then, and it is a path we will not take today,” said Richard Mills, spokesman for the U.S. Trade Representative’s Office.

China’s currency, the yuan, is pegged at 8.28 to the dollar, a rate that does not move even as economic circumstances change. But pressure from the administration has led China to take steps toward a flexible exchange rate, Mr. Mills said.

“Our policy offers more effective tools to move China toward a flexible, market-based exchange rate,” Mr. Mills said.

The groups filing yesterday’s petition disagreed.

“If there is progress, it is almost imperceptible,” said Bill Hickey, president of Lapham-Hickey Steel, a Chicago company and a member of the coalition.

Bush administration opposition to the petitions splintered a broader industry effort against China’s currency peg.

The National Association of Manufacturers led a group called the Fair Currency Alliance, but NAM, the American Forest & Paper Association and other broad-based industry groups declined to support yesterday’s petition, leaving the smaller coalition to file.

NAM said filing a trade case now would be a political statement and would not aid progress on the currency problem.

“Some supporting today’s filing clearly intend a statement of genuine concern about exchange rates, but, regrettably, other filers seem to be more serious about election-year politics than about currency values,” said Michael Baroody, NAM’s executive vice president.

The campaigns of Mr. Bush and Sen. John Kerry, Massachusetts Democrat, have sparred on trade and economic policy, including how to handle surging imports from China.

“As president, I would take America in the right direction — acting vigorously to end China’s illegal currency manipulation without tying one hand behind my back and taking potential options off the table,” Mr. Kerry said yesterday.

Mr. Bush has said his rival’s “isolationist” economic policies would hurt companies, workers and consumers.

The U.S. trade deficit with China almost doubled in five years, to $124.9 billion in 2003. Since 2001, the U.S. trade deficit with China has been larger than any other trade partner.

The influx of goods has alarmed organized labor and some industries as production shifts overseas and jobs in some sectors are lost.

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