Clinton, Obama Both Throw Weight Behind Chinese Currency Legislation

Fri. May 2, 2008


Both Democratic candidates for president have now thrown their weight behind legislation to allow companies affected by Chinese currency manipulation to seek remedies, which backers say might spark congressional movement headed into the November elections.

While campaigning in Indiana, a state hard-hit by manufacturing job losses, Democratic Sen. Hillary Rodham Clinton of New York on Wednesday -- followed by Sen. Barack Obama, D-Ill., Thursday -- said they would co-sponsor a bill that would penalize countries like China for devaluing its currency. The practice has made goods from that country cheaper at the expense of domestically produced goods, U.S. businesses and jobs.

The bill's impact is not limited to China; for example, lawmakers and manufacturers have accused Japan of similar practices. But the intent is fairly clear.

"It is long past time for the United States to confront the issue of unfair trade with China," Obama said in a statement. "Each year, the Bush administration has failed to act on China's currency manipulation. This is unacceptable and allows China to continue inaccurately valuing its goods in a manner that mirrors a subsidy, which is inappropriate and we should call it what it is."

The bill was introduced last year by Sens. Debbie Stabenow, D-Mich., Jim Bunning, R-Ky., and Evan Bayh, D-Ind. It would allow companies to bring suit in U.S. trade courts to seek countervailing duties from Chinese companies and others whose governments artificially keep their currencies low, which critics argue is the equivalent of subsidized exports. The House version is authored by Reps. Timothy Ryan, D-Ohio, and Duncan Hunter, R-Calif.

Small to mid-sized manufacturers, labor unions and textile producers applauded the support of Clinton and Obama and said it should send a signal to Democratic leaders in Congress.

"It's certainly very powerful evidence that the American people are completely fed up with Washington's appeasement of Chinese trade predation, and they want action," said Alan Tonelson, a research fellow with the U.S. Business and Industry Council, which represents about 1,500 mostly family-owned businesses. "It's time for Congress' Democratic leaders in both the House and Senate to get the same message as well, to stop dithering on their respective versions ... and get a conferenced version to the president's desk."

Legislation dealing with the currency issue has been held up in the Senate in a turf dispute between the Banking and Finance committees. Until the panels work out an arrangement, Senate Majority Leader Reid does not want to favor one approach over another.

In the House, no bill has emerged out of the Ways and Means Committee as originally expected, after concerns were raised by some Democrats about the economic downturn and about penalizing China as it readies for the Beijing Olympics this summer.

Ways and Means Chairman Charles Rangel and Trade Subcommittee Chairman Sander Levin, D-Mich., wrote to Bush in March urging the administration to get tough with China, but did not rule out legislation if they failed to act.

Tonelson was not optimistic, however, given the lack of movement since Democrats took control of Congress. "I frankly don't know, I have been astonished thus far at how completely apathetic the leadership in the House in particular has been," he said. "The fact that the House Democratic leadership has let it wither on the vine for a year and a half has been both flabbergasting and inexcusable ... do they really want to be that out of step with their party's two leading political figures?"

Businesses that export to China argue that currency is the wrong focus, noting that the yuan has been steadily appreciating this year and that legislators should instead focus on issues like intellectual property rights and barriers to market access.

The U.S.-China Business Council Thursday released a report showing that 406 out of 435 congressional districts experienced growth in exports to China over the last seven years, including in Indiana. "China is the fastest growing export market that we have," said Erin Ennis, the group's vice-president.

China is not the only trade matter Obama and Clinton could influence this year. They this week said they each would oppose Congress taking up the Colombia Free Trade Agreement in a post-election session should either of them win the presidency. That lends an added urgency for supporters of the deal, as the clock is ticking toward the August recess and little of substance is expected to be accomplished in September before Congress adjourns for the elections.

"For almost a decade the United States has pursued a strategy in Colombia of fighting narco-trafficking and terrorism, strengthening Colombian democracy, and encouraging Colombia to enter into a free trade agreement with the U.S.," wrote five former U.S. ambassadors to Colombia in a letter to lawmakers Thursday. "The United States must stand by a close friend and ally by approving the Trade Promotion Agreement for Colombia and the United States."

by Peter Cohn

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