March 28, 2006

Currency reform to boost US-China ties: Sen.Graham

WASHINGTON (Reuters) - Persuading China to let its currency
appreciate will not resolve the United States' problems with
record trade deficits but it would improve strained relations,
one of two U.S. lawmakers proposing tariffs on Chinese imports
said on Tuesday.

"Our relationship with China is going backwards," said
Republican Sen. Lindsey Graham, a sponsor with Democratic Sen.
Charles Schumer of legislation that would levy 27.5 percent
tariffs on Chinese imports unless China lets its yuan rise in

"The currency issue will not wipe out the deficit," Graham
told reporters following an announcement that he and Schumer
were delaying a vote on the proposed legislation.

"It is not the magic bullet to solve all the trade deficit
problems but if the currency issue is resolved in a win-win
fashion ... it would give us confidence to engage the Chinese
in the future," he added.

Schumer and Graham, who visited China last week for talks
on currency issues, said on Tuesday they were delaying a Senate
vote on their tariff proposal but wanted to see movement toward
a higher-valued yuan.

Schumer said the two senators had worked closely with
Treasury Secretary John Snow over the past year, though he
acknowledged that Treasury opposes levying new tariffs. Schumer
said both sides agreed that "pressure" was necessary to get
Beijing to move toward revaluing its currency.