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US Lawmakers Accuse China of Unfair Trade Practices - 2003-09-10

Members of Congress have introduced legislation aimed at punishing China for failing to increase the value of its currency and for what lawmakers call unfair trade practices.

The legislation is sponsored by three Republican members of the House of Representatives and has the support of U.S. companies that have been complaining about the China's trade practices.

It would require the U.S. treasury secretary to report to Congress whether China is manipulating its currency, the yuan, to gain a trade advantage.

If this is found to be the case, tariffs equal to the percentage of manipulation would be imposed on Chinese imports in addition to those already in force.

Congressman Phil English says the bill would create what he calls the strongest weapon yet in dealing with China on trade issues.

“China's manipulation of the yuan is, in effect, a subsidy that gives their exporters a trade advantage of up to 40 percent,” he said. “It also serves as a tariff on U.S. goods, making them 40 percent more expensive in the Chinese market. This is unsustainable, and we will no longer stand for it.”

Congressman English praises the Bush administration for raising the currency issue in recent talks between the U.S. treasury secretary and Chinese officials.

Mr. English says China is "flagrantly violating" World Trade Organization (WTO) and International Monetary Fund (IMF) rules on currency norms and Congress must now take the initiative to compel the government in Beijing to float its currency.

“This cannot stand,” he said. “And for those concerned about free trade, I say: Chinese state-sponsored mercantilism is not free trade.”

Key sponsors of the legislation, called the "Currency Harmonization Initiative Through Neutralizing Action (CHINA) Act of 2003," represent states that have lost manufacturing jobs to competition from China.

“Since 1994, the yuan has been pegged at 8.3 yuan to the dollar. That is nearly 10 years it has been at that rate,” said Mark Green, a Republican congressman from Wisconsin. “It makes Chinese goods very cheap compared to American products. And it makes it very, very difficult for us to compete. It creates prices and rates that are not based on true market value, but based upon political decision-making.”

Congressman Green and others say their support for the legislation does not mean they are taking an anti-free trade stance. American workers, they say, need to have a level playing field.

Supporters of the bill say they expect to have strong bipartisan support in the House of Representatives. However, right now only 35 House members have signed on, all Republicans.