- The Washington Times - Tuesday, October 11, 2011

Legislation designed to punish China for its currency valuation passed the Senate on Tuesday with bipartisan support, though the top Republican in the House has vowed to kill the bill.

Supporters of the bill say China artificially undervalues its currency, letting the country sell its goods cheaper than U.S. companies can.

“This costs American jobs by unjustly tilting the playing field against American manufacturers,” said Senate Majority Leader Harry Reid, Nevada Democrat. “American businesses don’t need special advantages to compete. They just need an even playing field.”

The measure, sponsored by Democrats and Republicans, would allow compensatory tariffs to be imposed on goods from countries that are deemed to be undervaluing their currency. While the bill doesn’t name China directly, it is aimed at the Asian giant.

Economists say China’s currency, the yuan, is undervalued by at least 25 percent to 30 percent against the U.S. dollar. That means that Chinese goods sold in the United States become 25 percent to 30 percent cheaper, and U.S. goods exported to China that much more expensive.

The bill passed the Senate by a vote of 63-35.

But Chinese officials, as well as some members of Congress, have warned the measure could ignite a trade war between the two nations if it becomes law.

House Speaker John A. Boehner, who has denounced the measure, calling it “dangerous,” may not allow the bill to come up for a vote.

“For the Congress of the United States to pass legislation to force the Chinese to do what is arguably very difficult to do, I think, is wrong,” the Ohio Republican said.

House Majority Leader Eric Cantor, Virginia Republican, was noncommittal when asked if Republican leaders who control the chamber would allow a vote on the currency measure, saying they were waiting on the Obama administration to take a position.

“It is a big deal when you’re talking about a trading partner like China if you do this without the input of the White House,” he said. “It is very critical for them to lead on this. Let us hear what their concerns are and the consequences that may result.”

The bill presents a thorny problem for President Obama. Many in his political base want to take steps to punish China for its economic policies, but presidents also try to keep as free a hand as possible in the conduct of foreign relations, and having a policy dictated from Capitol Hill could be problematic.

The White House has implied Mr. Obama wouldn’t sign the bill if it passes both chambers as written.

The president “has concerns with some of the approaches that were taken [on the legislation], while he’s sympathetic to the problems that we’re trying to solve with this bill,” White House spokesman Dan Pfeiffer told MSNBC on Tuesday.

“So he wants to work with Congress to make sure that what we do is actually effective and solves the problem.”

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