[good news<g>]--Senate likely to pass China tariff bill: senator
By Doug Palmer | September 21, 2006
WASHINGTON (Reuters) - The Senate is likely to pass a bill aimed at forcing China to change its currency policies by threatening a 27.5 percent tariff on its exports to the United States, a top Republican senator said on Thursday.
boston.com
"I would expect it to pass and I'm sorry for that," said Senate Finance Committee Chairman Charles Grassley of Iowa.
Senate leaders have promised Sens. Charles Schumer, a New York Democrat, and Lindsey Graham, a South Carolina Republican, a vote next week on their bill threatening China with punitive tariffs.
Grassley, whose committee has jurisdiction over trade legislation, said he expected the vote to occur even though it could herald a return to the Smoot-Hawley tariff policies of the 1930s that are blamed by many economists for starting or at least protracting the Great Depression.
The House of Representatives would also have to pass the bill, and President George W. Bush would have to sign it for it to become law.
There is currently no similar bill in the House and the Bush administration strongly opposes the legislation.
However, many business groups and trade experts warn that even a Senate vote in favor of the bill could hurt trade relations with China.
"Senate passage ... alone will have negative repercussions for U.S. farmers, manufacturers, service providers and others, while undercutting, rather than promoting, the objectives it seeks to achieve," the Emergency Committee for American Trade, which is comprised of leading U.S. exporters and importers, said in a letter to all 100 members of the Senate.
U.S. manufacturers say China's currency is undervalued by 15 percent to 40 percent against the U.S. dollar, giving Chinese competitors an unfair advantage.
The Graham-Schumer bill directs the White House to impose a 27.5 percent tariff on goods from China if Beijing does not significantly raise the value of its currency within six months. That punishment could be delayed for 12 more months if China has begun implementing a plan to revalue its currency.
Grassley said he expected the legislation to pass because China has not followed through on longtime promises to move to a more flexible exchange rate policy.
U.S. Treasury Secretary Henry Paulson is currently in Beijing and announced on Wednesday the creation of a new high-level forum with China to work on trade and economic issues, such as Beijing's currency policy.
The yuan has gained in value during Paulson's visit to China, but manufacturers and many lawmakers are frustrated it still has risen only slightly since Beijing freed it from a longtime peg against the dollar in July 2005.
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