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US Treasury Secretary Henry Paulson turns this coming week from
negotiating with Chinese leaders to pressing two persistent US senators to back
off a bill that would levy tariffs on Chinese goods to punish Beijing for its
currency policies.
Senators Charles Schumer (D, NY) and Lindsey Graham (R, SC) appear intent on
forcing a vote this coming week on legislation to impose a 27.5% tariff on
China-made goods -- if Beijing doesn't allow its currency, the yuan, to rise
against the dollar. On three previous occasions, the senators have been on the
brink of bringing the issue to a vote, only to step back after appeals from the
Bush administration, which fears the bill could ignite a trade war.
Mr. Paulson's mission now is to convince the senators they should give the
newly announced US-China economic dialogue time to work. Senate Majority Leader
Bill Frist (R, Tenn.) sees a possible compromise: kicking the bill into a
lame-duck session after the November 7 elections.
But the senators say they are running out of patience. Unlike the previous
three episodes, this time they have made a written request to Mr. Frist for a
vote next week. "We've had dialogues for years and years, and we've had no
movement," Senator Schumer said. "A dialogue is not good enough." A spokesman
for Mr. Graham says he, too, is committed to pressing forward. The two lawmakers
are to confer with Mr. Paulson early in the coming week.
Treasury officials say Mr. Paulson is getting unprecedented access to Chinese
decision makers and needs time to make those connections work. On Friday, the
secretary held talks in Beijing with top leaders -- including a session in which
he and President Hu Jintao spontaneously dismissed their staffs after 30 minutes
of conversation and conferred in private for 20 more.
Mr. Paulson described the Hu meeting, as well as an earlier session with
Premier Wen Jiabao, as "substantive" and "unscripted." US officials said the
conversations touched sensitive issues ranging from China's lack of enforcement
of intellectual-property rights to concerns that Beijing is keeping the value of
the yuan low to give Chinese exporters an edge.
"I find it quite encouraging that there are very few issues -- I can't think
of any -- where there were differences on the principles," Mr. Paulson said.
"Where there are differences is on timing."
Early in his trip, Mr. Paulson suggested he might not have to persuade
Congress to get on board. "I know there's a short-term mentality in the world
today, but I don't think many people are going to judge me by what comes out of
one visit," he said. "And if they do, heaven help this country." By the time he
headed home, though, the secretary had changed his tune. "It's my job to
communicate with people up on the Hill," he said. "They're clients."
A senior administration official traveling with Mr. Paulson was more blunt
about the political challenge. "Any time we do anything related to China, we
know that there are those groups and individuals out there who want nothing
short of us coming here and taking out the baseball bat on the Chinese," the
official said.
Alarmed at the prospect of a Senate vote, the US Chamber of Commerce, the
National Association of Manufacturers and the Business Roundtable are rallying
opposition. Senate Finance Chairman Charles Grassley (R, Iowa) says passage is
likely if the bill is brought up, in part because "China hasn't delivered on" on
past promises.
With the elections looming, concerns about China and the economy are helping
to stoke voter angst. As a result, said Business Roundtable President John J.
Castellani, the tariff bill is "attractive politically" to some lawmakers. "The
problem is that not always does good politics make good policy," he said.
Business lobbyists also fear some senators see the vote as a chance to send a
shot across China's bow, knowing President Bush can block the measure from
becoming law -- if it gets through the House, where the outlook is
uncertain.
