*NEWS*CHINA’S TRADE PRACTICE UNFAIR

[Anonymous]

Lawmakers Say China’s Trade Practices Unfair

WASHINGTON (May 05) – Members of Congress are unhappy that
the Bush administration continues to refuse to bring a trade case against China
over a currency system that U.S. manufacturers say has contributed to a loss of
millions of jobs and a soaring trade deficit.

U.S. Trade Representative Rob Portman on Friday rejected
the latest petition for a trade case, filed in April by 12 senators and 22 House
members. It marked the third time the administration has rejected similar
petitions claiming that China should be brought before the World Trade
Organization on charges it is engaging in unfair trade practices by keeping its
currency, the yuan, tightly linked to the U.S. dollar.

“For a third time, the administration is turning a blind
eye to China’s unfair trade practices,” said Sen. Charles Schumer, D-N.Y., one
of the lawmakers who brought the petition.

Some lawmakers said Congress may have to act by passing
legislation sponsored by Schumer and Sen. Lindsey Graham, R-S.C., that would
impose across-the-board 27.5 percent tariffs on all Chinese products coming into
the United States unless China drops its fixed link to the dollar.

“If the administration continues to refuse to use existing
WTO rules, Congress will take other actions,” said Maryland Rep. Benjamin
Cardin, the senior Democrat on the House Ways and Means trade subcommittee.
“This is a serious issue that harms American workers and businesses each day it
continues.”

Last fall, a group of unions and manufacturing companies
sought to bring pressure on the administration during the closing weeks of the
presidential campaign by asking for a case to be brought under a provision of
U.S. trade law known as Section 301. It would allow for economic sanctions to be
imposed on China if the WTO ruled in this country’s favor and China still
refused to change its currency system.

The administration rejected that request and a petition
filed in November by lawmakers.

In a statement Friday, Portman spokesman Richard Mills said
that while the administration thinks China should move to a flexible,
market-based currency system, “we do not believe that a Section 301 action is an
appropriate or a productive way to achieve that action.”

The latest rejection came just over a week after the
Treasury Department, in a semiannual report to Congress, refused to cite China
as a country that manipulates its currency gain trade advantages.

U.S. manufacturers contend that China’s fixed currency
system has undervalued the yuan by as much as 40 percent, making Chinese
products cheaper in the domestic market and American goods more expensive in
China.

Critics say this practice has contributed to the loss of 3
million U.S. manufacturing jobs over the past five years and saddled the United
States with soaring trade deficits that hit a record $617 billion last year.
That included a $162 billion imbalance with China, the largest ever recorded
with a single country.

Treasury Secretary John Snow, in congressional testimony
Thursday, predicted that China would move to make its currency system more
flexible over the next five months, before the administration must make its next
report on Congress on the issue on Oct. 15.

The administration, which initially argued that China
should allow its currency to float freely with its value set by global currency
markets, now contends that such a move would be too disruptive in the near term.
But it argues that an interim step that would introduce more flexibility should
be taken.

While the administration has not specified what that step
should be, currency experts say China could link the yuan’s value to a group of
currencies from other countries, not just the dollar, or it could create a band
within which the currency could trade.

Frank Vargo, vice president for international affairs at
the National Association of Manufacturers, said that while his group was
disappointed that the administration had not cited China in the current report,
he believes it has sent a strong signal that China will be cited in October if
it has not moved by then.

[Author]

May 31, 2005 at 9:31 AM