In suggesting they'd force a vote on a bill to impose a 27.5
percent tariff on Chinese goods two US senators came under fire
yesterday after they vowed to proceed with the move that could harm
the trade relationship between the two powers.
Senators Charles Schumer and Lindsey Graham vowed to force a
vote by Saturday on legislation to impose a 27.5 percent tariff on
Chinese goods if the Chinese?government doesn't significantly
raise the value of its currency within six months.
"As an advocate of free trade I wrote a letter on behalf of my
association to all the members of the House and Senate asking them
to oppose the Schumer and Graham proposal," said Frank Keating,
president of American Council of Life Insurance (ACLI).
The group is a Washington-based trade association whose 377
member companies account for 91 percent of the US life insurance
industry's total assets. ?
"It's encouraging to see that Schumer said he didn't expect the
Bill to go anywhere," added Keating, a former Oklahoma governor who
has served both Presidents Ronald Reagan and George H. W. Bush.
"It's impossible for this legislation to pass," said Mei Xinyu,
a trade researcher at the Chinese Academy of International Trade
and Economic Cooperation. "And the yuan's appreciation is
insufficient to rein in the growth of China's exports."
With little chance of the legislation being passed Schumer last
week said he wanted to use the threat of tariffs to spur Chinese
officials to boost the yuan and didn't want the Bill to become
law.
China ended the yuan's peg to the US dollar in July 2005 and the
value of the yuan against the dollar has risen 2.41 percent since
then but this has failed to quell calls in some circles for a
further appreciation.
Central bank Governor Zhou Xiaochuan said last Thursday that
China planned to end exchange controls on the yuan and open its
financial markets but gave no timetable. "We'll continue our
efforts to develop our financial market and widen it gradually but
will push for the free convertibility of the yuan in a stable
manner," commented the governor.??
Schumer and Graham first offered their Bill as an amendment to
other legislation in April 2004 but stepped back after appeals from
the Bush administration, which fears such a move could ignite a
trade war.
The senators claim China's currency is undervalued by 15 to 40
percent giving China a competitive edge in exports and resulting in
a growing trade surplus with the US. China's trade surplus widened
to US$18.8 billion in August from US$14.6 billion in July,
according to the latest statistics from the customs bureau.
Last month Schumer and Graham told reporters they'd demand a
vote before Saturday unless China quickly took more steps toward
revaluing. ?
US Treasury Secretary Henry Paulson also urged the two senators
to drop the Bill during his recent visit to Beijing. Paulson's
mission now is to convince the senators they should give the newly
announced US-China economic dialogue time to work.
(China Daily September 27, 2006)