A group of U.S. senators has introduced legislation aimed at pressing China to more quickly raise the value of its currency. VOA's Deborah Tate reports from Capitol Hill.
The legislation, which does not mention China by name, offers new penalties against countries that undervalue their currencies for unfair trade advantage.
Senator Max Baucus, a Montana Democrat, chairman of the Senate Finance Committee, is a sponsor of the bill.
"This is a reasonable response to the problems caused when currencies are out of sync," said Senator Baucus.
U.S. manufacturers argue that China is undervaluing its currency by as much as 40 percent, resulting in a flood of inexpensive Chinese imports and contributing to a U.S. trade deficit that reached $233 billion last year.
Lawmakers, concerned by the loss of millions of U.S. manufacturing jobs, are pressing the Bush administration to take a tougher approach.
Senator Lindsey Graham is a South Carolina Republican:
"We are going to begin to fight back against a currency manipulation program that is authored by the Chinese government that is skewing the results of international trade unfairly to their advantage," said Senator Graham. "The fate of this relationship in the future is in China's hands."
The bill requires the U.S. Treasury Department to identify so-called "fundamentally misaligned" currencies, and those determined to be the result of clear government policy actions would be subject to U.S. action.
The Treasury Department would be required to seek advice from the International Monetary Fund and key trading partners about the matter.
If the targeted country fails to bring its currency into line within six months, the Commerce Department would be required to include the degree of currency undervaluation in its calculation of anti-dumping duties on that country.
After one year, the U.S. Trade Representative's office would be required to file a complaint at the World Trade Organization with the government responsible for the currency misalignment. The Treasury Department also would have to consult with the Federal Reserve Board and other central banks to consider intervention in currency markets.
The bill allows the president to waive the requirements if they would harm U.S. national security or the vital economic interest of the United States.
Beijing has warned of repercussions if any legislation imposes penalties on China over its currency.
The legislation was introduced just hours after the Treasury Department issued a report that declined to cite China as a country that manipulates its currency to gain unfair trade advantages. Instead, the report said Beijing's tightly controlled exchange rates had led to a massive buildup in currency reserves that posed economic risks.