(Adds dropped words "to the United States" in paragraph 9)
* Senate votes to open debate on China currency bill
* Lawmakers say bill will level playing field
* Opponents see trade war threat to sickly world economy
* White House reviewing bill but supports its goals
(Recasts with Senate vote to open debate, paragraphs 1-3)
By Doug Palmer and Paul Eckert
WASHINGTON, Oct 3 The U.S. Senate on Monday
took aim at one of China's core economic policies, voting to
move forward with a bill designed to press Beijing to let its
currency rise in value in the hope of creating U.S. jobs.
Senators voted 79-19 to open a week of Senate debate on the
Currency Exchange Rate Oversight Reform Act of 2011, which
would allow the U.S. government to slap countervailing duties
on products from countries found to be subsidizing their
exports by undervaluing their currencies.
The procedural vote sets the stage for a battle between
lawmakers who say the bill will return to the United States
many jobs lost to China and critics who warn it could spark a
trade war and will fail to help American workers.
"My colleagues, both Democrats and Republicans, agree that
China's deliberate actions to devalue its currency give its
goods an unfair competitive advantage in the marketplace," said
Senate Majority Leader Harry Reid.
"It hurts our economy. It costs American jobs," he said.
Monday's strong green light for debate on the bill bolsters
prospects it will clear the Democrat-run Senate later this
week, but prospects for action in the Republican-controlled
House of Representatives are murky.
If the bill did clear both chambers, it would present
President Barack Obama with a tough decision on whether to sign
the popular legislation into law and risk a trade war with
Beijing, or veto it to pursue a more diplomatic approach.
Many Democrats and some Republicans accuse Beijing of
deliberately holding down the value of its yuan currency to
give Chinese producers an edge in global markets.
In an argument that has gained traction with U.S.
unemployment stuck above 9 percent as 2012 elections draw near,
supporters of the bill say that if the yuan was allowed to
rise, Chinese imports to the United States would fall and U.S.
exports would increase, cutting an annual trade gap of more
than $250 billion and creating jobs for American workers.
As with similar legislation in the past, the Obama
administration has not taken a public stance on the bill,
although White House spokesman Jay Carney said on Monday that
the president shares "the goal it represents."
He said the White House was reviewing the bill to ensure it
was "effective and consistent with our international
obligations." For a Q&A on the bill, click on [ID:nN1E79108C]
NO TIME FOR A TRADE WAR
Passage of the bill by the Democratic-controlled Senate
would send it to the House, which is run by traditionally
A China currency bill passed the House last year with 99
Republican votes, but lapsed because the Senate took no action.
This year, the bill already has more than 200 House co-sponsors
and this week supporters expect to reach 218, the number needed
to pass it.
However, House Republican leaders have not shown a great
appetite to pursue currency legislation, and it is unclear if
the bill would ever face a vote in that chamber.
House Majority Leader Eric Cantor, a key player in deciding
whether the chamber will take up the bill, did not tip his hand
on Monday, telling reporters he was watching the Senate debate
and "curious, really, where the White House is on that."
Cantor, who voted against similar legislation a year ago,
said he was "really interested to hear what impact that move
will have and if there are any unintended consequences that may
Critics of the bill, including U.S. business groups, warn
that the legislation, if enacted, would risk a trade war with
China -- one of the fastest-growing markets for U.S. goods --
at a time when a sputtering global economy can least afford it.
The Emergency Committee for American Trade called the bill
"a highly damaging unilateral approach that will undermine
broader efforts to address China's currency undervaluation."
It also said the bill was unlikely to pass muster at the
World Trade Organization and would open the door to Chinese
retaliation "to the detriment of U.S. exports and jobs."
China rejects outside criticism of its yuan policies as
interference in a sovereign decision and note that the currency
has appreciated about 30 percent since 2005.
While similar bills have foundered in the past, jobs are
such a hot topic heading into next year's U.S. elections that
prospects may have shifted.
"On issue after issue, China is mercantilist, plain and
simple," Democratic Senator Charles Schumer told the Senate.
(Additional reporting by Matt Spetalnick and Susan Cornwell;
Writing by Paul Eckert; Editing by Anthony Boadle and Eric