Members Of Congress Seek Chinese Currency Reform
James A. Morrissey, Washington Correspondent
As Chinese Premier Wen Jiabao denied that his nation's currency is undervalued and claimed that
efforts to pressure China to revalue it amounts to "protectionism," a bipartisan group of 132
members of the House of Representatives has urged the Obama administration to "urgently address"
what they see as growing problems resulting from China's currency.
At a news conference following the annual session of China's legislature, Wen said: "I understand that some countries want to increase their exports, but I don't understand the practice of depreciating their currencies and forcing others to increase theirs in order to accomplish this. I think it is a type of trade protectionism." In addition, Wen said he does not think the Chinese yuan is undervalued.
A letter to the Obama cabinet secretaries -- drafted by Reps. Mike Michaud, D-Maine, and Tim Ryan, D-Ohio, and signed by 130 of their colleagues -- said: "The impact of China's currency manipulation on the U.S. economy cannot be overstated. Maintaining its currency at a devalued exchange rate provides a subsidy to Chinese companies and unfairly disadvantages foreign competitors."
The letter urges Secretary of Commerce Gary Locke to levy countervailing duties on Chinese imports, saying China's actions meet all of the basic criteria for applying the law to illegally subsidized imports. It also called on Treasury Secretary Timothy Geithner to designate China as a country that manipulates its currency in the department's upcoming report on currency manipulation. After labeling China as a currency manipulator, the congressmen said, Treasury should enter into negotiations with China regarding its currency regime. They said these actions would "signal the U.S. government's willingness to take decisive action against China's currency manipulation, including the potential filing of a formal complaint with the World Trade Organization [WTO]."
The congressional letter won high praise from members of the Fair Currency Coalition (FCC), which includes textile members.
Claiming that Chinese products are frequently priced at less than the cost of materials, FCC Executive Director Charles Blum said: "This is illegal government subsidization, pure and simple, and it destroys American jobs. Applying Countervailing Duties is a must have if America is to achieve sustainable recovery."
The Coalition pointed out that export subsidies are prohibited under WTO rules, and, when subsidies cause injury, WTO rules mandate countervailing remedies.
March 16, 2010