Opposition lawmakers pressed the Obama administration’s top trade official to quickly clarify whether proposed U.S. legislation to force China to revalue the yuan is legal under global trade rules.
U.S. lawmakers are weighing whether to punish China for practices they say keep the yuan artificially low, hurting American jobs and competitiveness.
In a letter to U.S. Trade Representative Ron Kirk, two Republicans voiced concern that the bill might violate World Trade Organization rules, drawing retaliation against American businesses.
House of Representatives Ways and Means Committee members Dave Camp and Kevin Brady repeated to Kirk skepticism about the bill they raised in two days of angry congressional hearings.
“While we share the deep frustration that China’s currency is significantly undervalued and must adjust to reflect market reality, we expressed concern at both hearings about whether (the bill) is the appropriate remedy,” they wrote.
“In particular, we questioned whether this legislation is consistent with U.S. obligations under World Trade Organization rules,” the letter said.
U.S. Treasury Secretary Timothy Geithner said the Obama administration had not endorsed the House bill, which would slap duties on goods from countries with “fundamentally misaligned” currencies.
But, Geithner said, “we are carefully looking at it” and would consult with USTR lawyers to be sure it was compatible with WTO rules.
The yuan has risen only about 1.25 percent against the dollar since the peg was broken in June. But in the past six days, the currency has made its fastest rise since February 2008.
U.S. lawmakers are contemplating whether to push ahead with action against China before a Nov. 2 congressional election that will hinge on voter concerns about the weak economy.
Camp, the senior Republican on the Ways and Means Committee, and Brady asked Kirk to reply by September 26.
“With only a few weeks left in the legislative calendar this year, it is important that we receive a timely response,” they wrote.
With both chambers due to be in recess by mid-October to prepare for the congressional election, prospects for a vote before then are uncertain. (Reuters)