Obama Pressed on China Currency Subsidy Complaint
U.S. President Barack Obama
Chris Kleponis/Bloomberg
U.S. President Barack Obama makes remarks on the resignation of Army General Stanley McChrystal, in the Rose Garden of the White House in Washington.
U.S. President Barack Obama makes remarks on the resignation of Army General Stanley McChrystal, in the Rose Garden of the White House in Washington. Photographer: Chris Kleponis/Bloomberg
President Barack Obama’s administration came under pressure to treat China’s currency policy as a subsidy, as lawmakers said China’s pledge to change its yuan peg was just a “baby step.”
Democrats and Republicans in Congress said they will press legislation to let companies seek tariffs on imports to compensate for advantages a weak currency gives Chinese producers. They urged Commerce Secretary Gary Locke to levy the tariffs now, saying a bill isn’t needed for the department to act.
“The government has not taken enough action, and that includes both Treasury and Commerce,” Senator Charles Schumer, a New York Democrat and sponsor of legislation, told Locke today at a Senate Finance Committee hearing. The policy gives China an “unfair trade advantage, yet the Commerce Department refuses to exercise its authority under current law,” Schumer said.
China said on June 19 that it was lifting a two-year policy of pegging its currency, the yuan, to the U.S. dollar. The yuan closed at 6.8124 per dollar in Shanghai, little changed from 6.8136 yesterday, according to the China Foreign Exchange Trade System. It has gained 0.23 percent this week.
Locke reiterated the Obama administration’s conclusion that the yuan is undervalued, and said he is reviewing petitions from American makers of glossy paper and aluminum tubes, which say that China’s currency creates a subsidy that should be countered by so-called countervailing duties.
‘Carefully Monitoring’
Locke said he is “carefully monitoring” the complaints. “Given the scrutiny that such decisions face in U.S. courts, I want to make sure our decision on whether to investigate is warranted by the facts and the law,” he said.
Neither China’s move nor the Obama administration’s reaction was enough to placate lawmakers, and a Senate vote on the measure would come soon, Schumer said. The lawmaker gained support today from Senate Finance Committee Chairman Max Baucus, who said he would reintroduce currency legislation his committee approved in 2007. He didn’t say if that would be done in addition or in place of Schumer’s measure.
The Baucus bill changed the definition of currency manipulation to currency misalignment, and allowed domestic producers to seek tariffs on imports through a different mechanism.
“The U.S. needs to stand up for itself,” Baucus said. “The concern here is that we are letting the Chinese take advantage of us.”
Ohio Democrat Tim Ryan and Republican Tim Murphy of Pennsylvania said today that they will push in the House of Representatives for legislation similar to Schumer’s bill.
To contact the reporters on this story: Mark Drajem in Washington at mdrajem@bloomberg.net
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