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WASHINGTON : Under election-year pressure over trade-driven jobs, US senators were to unveil legislation Tuesday that would impose tough new penalties on China if it failed to revalue its currency.
The legislation, which enjoys support from both sides of the political aisle, would punish currency manipulation as an unfair subsidy and could trigger a set of retaliatory US policies, according to a copy of the proposal made available to AFP.
Led by Democratic Senator Chuck Schumer, the move came as lawmakers in Washington stepped up criticism of China ahead of November mid-term US elections, accusing Beijing of securing an unfair edge in trade by keeping the yuan artificially low.
It also follows Chinese Premier Wen Jiabao strong statement at the weekend that Beijing would resist any foreign pressure for a stronger yuan.
On Monday, a group of 130 Democratic and Republican lawmakers called on US Treasury Secretary Timothy Geithner to brand China a currency manipulator in a report due next month, saying Beijing was in effect subsidising exports.
"The impact of China's currency manipulation on the US economy cannot be overstated," the lawmakers said in the letter submitted to Geithner and US Commerce Secretary Gary Locke.
"We share Congress's commitment to the continued rigorous enforcement of US trade laws to ensure that US businesses and workers maintain a level playing field," Locke's spokeswoman Parita Shah told AFP.
President Barack Obama last week renewed his call to China to embrace a "market oriented" exchange rate, upping US pressure on the Chinese yuan currency at a time of turmoil in Washington's delicate relations with Beijing.
Schumer's bill would require the US Treasury Department to identify countries with "fundamentally misaligned currencies" and a second "priority action" list of such countries that pursue such imbalances as policy.
Countries on the "priority" list would face a range of US responses, including a possible change in whether such nations get "market economy" designation for the purposes of US anti-dumping laws.
US policy would be required to reflect currency undervaluation in dumping calculations for products made in the designated country, and forbid the US government from buying goods or services from such a country unless it is a member of the WTO Government Procurement Agreement.
The measure would target projects in a designated country, including forbidding overseas private financing or insurance and opposing new multilateral bank financing, if the country fails to adopt "appropriate policies," according to a summary of the legislation.
Washington would also ask the International Monetary Fund to engage designated countries in special talks on their currency under the plan.
The measure would also require the top US trade official to request dispute settlement consultations in the World Trade Organization with the government responsible for the currency.
And it would call on the Department of Treasury to consult with the Federal Reserve Board and other central banks to consider remedial intervention in currency markets.
Chinese Premier Wen blamed the United States on Sunday for recent tensions in Sino-US ties, indicating no let-up in their diplomatic row.
Wen accused Washington of violating China's sovereignty when it approved the sale of billions of dollars in weapons to Taiwan in January, and again when US President Barack Obama met the Dalai Lama at the White House last month.
Relations between the two countries have deteriorated over a series of other issues -- Google's threat to leave China over cyberattacks and web censorship, a string of trade disputes, and the value of the Chinese yuan.
- AFP /ls
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