US Senate votes to allow debate on yuan bill
Updated: 2011-10-04 09:39
WASHINGTON - The US Senate voted Monday to allow a debate on a controversial bill on so-called "currency manipulation" by China amid strong opposition from China and US business groups.
The 79-19 vote opened a week-long debate on the bill, the last procedure before it is to be finally voted on the Senate floor. And for the bill to become law, it would still have to clear the House of Representatives and then be signed by President Barack Obama.
The Currency Exchange Rate Oversight Reform Act is sponsored by Senators Charles Schumer, Sherrod Brown and other Democrat and Republican lawmakers.
With alleged goals of reducing trade imbalance between the two countries and creating more jobs at home, the bill would require the US treasury department to designate China as a "currency manipulator" and empower US companies to slap retaliatory tariffs on goods imported from countries whose currencies they deem "undervalued."
White House spokesman Jay Carney said on Monday that, while the White House shares the Senate's goal of achieving further appreciation of China's currency, the yuan, "it's important that as we pursue that goal, we do so in a way that is both effective and consistent with our international obligations."
China has already voiced strong opposition to the bill, urging the US politicians to avoid ramping up trade protectionism and not to politicize the exchange rate issue.
Hong Lei, China's Foreign Ministry spokesman, reiterated on Thursday China's position that the yuan's exchange rate is not the cause of the China-US trade imbalance, and hopes the US Congress would "maintain the overall interests of bilateral trade and economic relations and refrain from politicizing this issue."
The US Senate took up China's currency issue at a time when the US unemployment is hovering above 9 percent and both Republican and Democratic parties are gearing up for next year's presidential election, which is expected to be dominated by unemployment and economic issues.
Critics argue that figures from the past 20 years show no link between China's exchange rate and the US unemployment rate. Although the yuan has appreciated against the dollar for over 25 percent since 2005, the US unemployment rate has nevertheless risen from about 7 percent to over 9 percent.
In a letter sent last week to Senate leaders, 51 US business and industry organizations, including American Association of Exporters and Importers, American Chamber of Commerce in China, and Agriculture Transportation, urged the Senate to refrain from passing the legislation.
"Unilateral legislation on this issue would be counterproductive not only to the goals related to China's exchange rate that we all share, but also to our nation's broader objectives of addressing the many and growing challenges that we face in China," the letter said.