Economy

US business wants China currency bill dropped from package

(Xinhua)
Updated: 2010-07-27 17:34

WASHINGTON - More than 20 business groups have recently urged the exclusion of a bill on China's currency policy from a package of manufacturing bills that lawmakers will start voting on this week.

The Currency Reform for Fair Trade Act, also known as the Ryan-Murphy Bill, "will not bring manufacturing jobs back to the United States," the business groups said in a letter sent to House of Representatives Speaker Nancy Pelosi and Majority Leader Steny Hoyer.

"Instead, the bill will likely result in the loss of jobs and market share in many competitive US agricultural, manufacturing and service industries that either operate in, or export to, China," the letter says.

The letter was signed by 28 business groups, including the Business Roundtable, National Foreign Trade Council, National Retail Federation, the US Chamber of Commerce and US-China Business Council.

Sponsors of the Ryan-Murphy Bill have claimed the Chinese currency yuan is significantly undervalued to give China an unfair advantage in trade with the United States.

If enacted, the bill would require the Commerce Department to impose countervailing or anti-dumping duties against China.

The bill came amid political pressures ahead of the upcoming congressional elections.

The business groups said they "strongly disagree that legislation is the best means to achieve that goal," referring to the bill's stated goal of saving manufacturing jobs in the United States.

"China is unlikely to proceed more quickly with currency reforms if threatened with this action," they said in the letter, which was posted on the website of the US-China Business Council last week.

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Estimations of the "correct" currency value "would be inherently subjective and potentially politicized." The proposed legislation would also likely violate the United States' commitments under World Trade Organization (WTO) rules, the letter says.

"Additionally, China could mount a successful challenge to US sanctions in the WTO," it says.

China has insisted its currency policy should not be influenced by external pressures. Its central bank pledged on June 19 to allow greater flexibility in yuan exchange rate movements.

Analysts were divided on whether the yuan should appreciate, with some seeing the international pressure being applied to China to appreciate as the cause of asset bubbles.

While some exporters in the United States blame what they see as an undervalued yuan for unsatisfactory business performance, importers and the retail industry say they benefit from cheaper goods and services from China and other countries thanks to the international division of labor.

Lawmakers will start voting this week on the package of bills aimed at helping US domestic manufacturers and the energy sector.

The Ways and Means Trade Committee of the House of Representatives is expected to hold a hearing to consider possible legislative options when lawmakers return on the week of September 12 from a six-week break.