US House lawmakers press for action on yuan
(Agencies)
Updated: 2005-06-22 08:30

U.S. lawmakers unveiled legislation Tuesday giving China 90 days to revalue its currency or face an across-the-board tariff on its exports to the United States.

US Treasury Secretary John Snow answers a question after meeting European Economic and Monetary Affairs Commissioner Joaquin Almunia in Brussels June 14, 2005. Snow denounced the bill by House representatives threatening China with penalty tariff if China fails to revalue its currency, the yuan, in 90 days. [Reuters]

"I think anything that points in the way of closing down trade, interfering with trade, isolationism and protectionism, those are all the wrong way to go," Snow said in an interview on Bloomberg television.

Representative Phil English of Pennsylvania, who introduced the bill, named Currency Harmonization Initiative through Neutralizing Action (China Act), with three other Republicans in the House of Representatives, said the measure reflected their growing frustration over China's practice of pegging its currency at 8.28 yuan to the dollar.

"One of the biggest burdens facing American manufacturers is the blatant mercantilism out of China," English said. "We feel the time has come to draw a line in the sand."

English and other lawmakers contend the currency peg keeps the value of China's yuan at an unfairly low level, giving that country's manufacturers a price advantage over their American competitors.

Snow said he would argue against measures to shut off the U.S. market to Chinese goods when he and Federal Reserve Chairman Alan Greenspan testify Thursday at a Senate Finance Committee hearing on U.S.-China economic relations.

"At the same time, it's important that the Chinese respond, that they play by the rules of the game, that they deal with the intellectual property issues that they need to address, that they deal with opening markets to us," Snow said.

Snow repeated Tuesday that China should "move to a flexible exchange rate."

Treasury would be required to issue its first report on the yuan 60 days, if the bill became law.

If currency manipulation is found, Treasury would have to impose a tariff on all of China's exports to the United States within 30 days. The size of the tariff would be equal to the percentage of yuan manipulation that is found and could be adjusted annually if China later revalues.

The bill would require the Bush administration to take faster action than another proposal that won the support of 67 senators earlier this year on a procedural vote.

That legislation offered by Senator Charles Schumer, a New York Democrat, and Sen. Lindsey Graham, a South Carolina Republican, would threaten China with a 27.5 percent across-the-board tariff if it did not revalue its currency within 6 months. It also contains a provision allowing the White House to delay that action for up to two years.