White House voices concern on China currency bill
WASHINGTON (Reuters) - The White House on Wednesday voiced concern that legislation the U.S. Senate is expected to approve this week designed to press China to let its currency rise could violate international trade rules.
While reiterating that it shared lawmakers' desire to ensure that U.S. workers and businesses face a level playing field when competing with China, the White House hardened its criticism of the legislation, which has drawn trade war warnings from Beijing.
"We certainly ... have concerns about this particular legislation, and whether or not it would create consistency issues with our international obligations," White House press secretary Jay Carney told reporters.
"We have, from the beginning as an administration, worked on the issue of the undervalued Chinese currency. And it has appreciated to some degree as a result, we think, of those efforts. More needs to be done," he said.
Many economists say China holds down the value of its yuan currency to give its exporters an edge in global markets. China says it is committed to gradual currency reform and notes that the yuan has risen 30 percent against the dollar since 2005.
The Democratic-controlled U.S. Senate on Thursday is expected to approve the controversial Currency Exchange Rate Oversight Reform Act of 2011.
The bill would then go to the House of Representatives, whose Republican leader underscored the bill's uncertain prospects on Tuesday by calling it "dangerous" and questioning whether it was the best approach.
"I think it's pretty dangerous to be moving legislation through the United States Congress forcing someone to deal with the value of their currency," House of Representatives Speaker John Boehner, who has the power to prevent debate in his chamber, told reporters.
Democratic Senator Sherrod Brown, one of the bipartisan bill's authors, said he was confident the Senate would vote on the bill on Thursday with minimal opposition from lawmakers keen to take action to bring down stubborn U.S. unemployment.
On Monday, the U.S. Senate voted 79-19 to start debate on the bill, which calls for U.S. tariffs on imports from countries with deliberately undervalued currencies, prompting an angry rebuke from China.
Brown pointed to that procedural vote as a sign the bill would easily clear the Senate.
"This bill doesn't cost taxpayer dollars. It actually will help reduce the budget deficit, so ... other than those who want to stand with companies that outsource jobs to China, I don't see where any real opposition to this bill should come from," he said.
Fred Bergsten, director of the Washington-based Peterson Institute for International Economics, estimates that a 20 percent rise in the yuan would reduce the U.S. trade deficit by $50 billion to $100 billion. At a gain of about 6,000 jobs for every $1 billion improvement in the trade balance, $100 billion would work out to 600,000 jobs.
But other economists argue that a stronger yuan would simply shift manufacturing to other low-cost producers such as Bangladesh or Vietnam, and not benefit the United States.
U.S. steel and other domestic manufacturers are hurt by the artificially-low yuan, while consumers benefit from lower prices on household goods. Most major business groups oppose the bill, which they say will cause more harm than good.
(Writing by Paul Eckert; editing by Anthony Boadle)