Senators to unveil China trade bill Tuesday

By Doug Palmer

WASHINGTON (Reuters) – The top Republican and Democrat on
the Senate Finance Committee plan to introduce long-awaited
China trade legislation on Tuesday — a move that could siphon
support from a controversial bill threatening China with
tariffs.

Senate Finance Committee Charles Grassley, an Iowa
Republican, and Sen. Max Baucus, a Montana Democrat, said in a
press release on Friday they would unveil their bill on
Tuesday. That is just a few days before the Senate is scheduled
to vote on a bill threatening to punish China for its currency
policies.

Many U.S. lawmakers and manufacturers believe China
deliberately undervalues its yuan by 15 to 40 percent, which
they say gives Chinese companies a big advantage over their
American competitors.

The United States has been pressing China for action on the
issues and would like to see the yuan rise further against the
dollar before a White House meeting between U.S. President
George W. Bush and Chinese President Hu Jintao on April 20.

The Grassley-Baucus “legislation will establish a more
constructive framework to address currency imbalances that harm
the U.S. economy,” the senators’ statement said. “The bill will
also address congressional concerns regarding trade
enforcement, by focusing efforts to prioritize and respond to
the most significant export barriers.”

The legislation is aimed at facilitating “a more positive
engagement with our trading partners, including China, by
encouraging compliance with the norms expected of economies
that derive benefit from an open international trading system,”
the senators’ statement said.

The United States wants China, which has benefited greatly
from export-led growth in recent decades, to open its markets
to more foreign goods and to stamp out piracy and
counterfeiting that cost American companies billions of dollars
in lost sales every year.

In a sign of frustration over the huge U.S. trade deficit
with China, which hit a record $202 billion last year, the
Senate is scheduled to vote next Friday on a bill threatening
China with a 27.5 percent tariff on its exports to the United
States if Beijing does not revalue its yuan currency at a “fair
market” value against the U.S. dollar.

The authors of that legislation — Sen. Charles Schumer, a
New York Democrat, and Sen. Lindsey Graham, a South Carolina
Republican — indicated after meetings with senior Chinese
officials this week in Beijing that they could decide to delay
a vote on their bill.

Schumer and Graham said they would make a final decision
after consulting next week with U.S. Treasury Secretary John
Snow and Senate colleagues. Last year, the Graham-Schumer bill
survived an effort to kill it on the Senate floor by a vote of
67-33, sending the Bush administration a wakeup call about the
level of anger in Congress about trade relations with China.