WASHINGTON (Reuters) - The White House on Wednesday said it was “reviewing” a Senate bill to crack down on China’s currency practices after a senior Republican senator demanded the administration lay out its position on the legislation.
“We are reviewing the bill,” White House spokesman Jay Carney told reporters. “We share the goal of achieving further appreciation of China’s currency.”
“China has moved some in terms of appreciating its currency ... But it’s substantially undervalued and we need to see continued progress. And we’ve made that clear publicly and privately,” Carney said.
Senate Majority Leader Harry Reid plans to take up the bipartisan legislation, which is aimed in part at pressuring Beijing to let its yuan currency rise faster, and has told reporters he felt “very confident” it would be approved.
Many U.S. lawmakers believe the yuan is undervalued by as much as 25 percent to 40 percent, giving Chinese companies an unfair price advantage in trade and costing American jobs.
A key provision would instruct the Commerce Department to treat undervalued currencies as a subsidy under U.S. trade law, allowing companies to ask for countervailing duties against imports on a case-by-case basis.
In order to become law, the bill would have to be passed also by the House of Representatives and then be signed by President Barack Obama.
The Congressional Budget Office estimated a similar measure passed last year by the House would collect about $125 million in new tariff revenues over ten years, based on its conclusion that only a “small share” of imports from China and other countries would qualify for the relief.
That legislation died in the Senate, but concern about continued high U.S. unemployment and slow economic growth has prompted lawmakers to focus again on the issue, which is resonating on the campaign trail.
In an interview on MSNBC, Republican presidential candidate Mitt Romney said on Wednesday that he saw China as an “economic threat” to the United States. Under a Romney administration, “We’re going to clamp down on China when they cheat,” he said.
House Republican leaders have not signaled any desire to consider the legislation, although many rank-and-file Republicans support taking action on the currency front.
The Obama administration so far has been silent on the measure, following a pattern it displayed last year when the then Democrat-controlled House passed a similar bill.
With Senate action approaching, a senior Republican called on the administration to break its silence on the legislation, which is opposed by a large swath of business groups but supported by labor and domestic manufacturers that compete directly with lower-price imports from China.
“Before the Senate moves forward, it’s imperative that the 100 members of this body have a full understanding of the administration’s views on this legislation,” Senator Orrin Hatch said in a letter to U.S. Treasury Secretary Timothy Geithner and U.S. Trade Representative Ron Kirk.
Hatch, the top Republican on the Senate Finance Committee, asked for a written reply by late Monday afternoon, just before the Senate is scheduled to vote on taking up the bill.
China’s yuan, also known as the renminbi, has risen about 3 percent against the dollar this year and about 6.7 percent since its peg to the dollar was loosened in June 2010. It closed slightly higher on Wednesday.
“The renminbi’s exchange rate is not the cause of the trade imbalance between China and the U.S.,” Chinese Foreign Ministry spokesman Hong Lei said in Beijing. “We hope the U.S. will maintain the overall interests of bilateral trade and economic relations and refrain from politicizing this issue.”
In his letter, Hatch asked Geithner to “please provide any constitutional, legal, or other policy concerns the administration has with the currency provisions included in the bill.” He also pressed Kirk to explain whether the administration believes the legislation complies with World Trade Organization rules.
Additional reporting by Matt Spetalnick and John O'Callaghan; Editing by Sandra Maler and Jackie Frank