US Congress takes up China, free trade, jobs bills

JIM ABRAMS

Asso­ci­ated Press

WASHINGTON (AP) — The U.S. Con­gress is embark­ing on a flurry of votes to show it is try­ing to do some­thing about cre­at­ing jobs. The prospects for leg­isla­tive suc­cess, how­ever, are spotty.

One excep­tion is in the area of trade. Con­gress is expected to approve free trade agree­ments with South Korea, Colom­bia and Panama that have been pend­ing since the pres­i­dency of George W. Bush. Sup­port­ers of the treaties — the first com­pleted in the Obama admin­is­tra­tion — say the pacts could boost exports by $13 bil­lion a year and fos­ter tens of thou­sands of Amer­i­can jobs.

The House takes up the three agree­ments on Tues­day, along with leg­is­la­tion pushed by Obama and Democ­rats to help work­ers dis­placed by for­eign trade. Both cham­bers could sign off on the mea­sures by Wednes­day night.

The Sen­ate on Tues­day is also hold­ing a pro­ce­dural vote on the $447 bil­lion plan to pro­mote job growth, which Obama pro­posed in a slightly dif­fer­ent form a month ago. Repub­li­cans appear united in oppo­si­tion and Democ­rats, with 53 votes in the Sen­ate, face a dif­fi­cult task in com­ing up with the 60 votes needed in the 100-member cham­ber to keep the bill alive.

The Sen­ate on Tues­day is also expected to pass leg­is­la­tion to impose tar­iffs on Chi­nese exports if the Bei­jing gov­ern­ment con­tin­ues to keep its cur­rency under­val­ued. Sup­port­ers say the mea­sure will make Amer­i­can pro­duc­ers more com­pet­i­tive and bring jobs back home.

The bill enjoys broad bipar­ti­san sup­port from sen­a­tors who for years have been hear­ing com­plaints from con­stituents blam­ing unfair com­pe­ti­tion from China for shut­ter­ing U.S. fac­to­ries and putting Amer­i­cans out of work.

But the bill faces an uncer­tain future.

The leader of the House, Speaker John Boehner, a Repub­li­can, opposes it and may never bring it to the House floor. Obama and the White House, while avoid­ing a posi­tion on the bill, have warned against uni­lat­eral action that might vio­late inter­na­tional trad­ing rules. Amer­i­can com­pa­nies doing busi­ness in China warn that it could spark a trade war.

But with the trade deficit with China hit­ting $273 bil­lion last year and head­ing toward $300 bil­lion this year, sen­a­tors said it was time to get tough.

“If China con­tin­ues its preda­tory prac­tices, the future for our chil­dren and grand­chil­dren in this coun­try will not be bright,” said Sen. Charles Schumer, a Demo­c­rat who has tried numer­ous times in past years to slap sanc­tions on the Chinese.

Econ­o­mists say China’s cur­rency, the yuan, is under­val­ued by about 25 to 30 per­cent, and pos­si­bly by as much as 40 per­cent against the dol­lar. That means that Chi­nese goods sold in the United States have a 25 to 30 per­cent price advan­tage, and U.S. goods exported to China face a dis­ad­van­tage of that same amount.

The Fair Cur­rency Coali­tion, a group push­ing for changes in China’s exchange rate, gives the exam­ple of a steel mill that might cost 4 bil­lion yuan to build in China. It says that at an equi­table cur­rency rate that would mean a price tag of about $900 mil­lion, but at cur­rent rates it would cost only $600 mil­lion, cre­at­ing a big­ger incen­tive to aban­don fac­to­ries at home and relocate.

Demo­c­ra­tic Sen. Sher­rod Brown, whose state of Ohio has been hit hard by Chi­nese com­pe­ti­tion, cited a tool and die shop in Brunswick, Ohio, that was about to sign a $1 mil­lion con­tract until the Chi­nese came in at the last moment with a bid 20 per­cent lower.

“That meant I don’t know how many jobs that didn’t stay in Amer­ica but went to China and that 20 per­cent was given to them because of cur­rency,” said Brown, a chief spon­sor of the bill.

The leg­is­la­tion does not specif­i­cally men­tion China but would make it eas­ier for the Trea­sury Depart­ment to declare a cur­rency mis­aligned. It would require action if the offend­ing coun­try does not address the prob­lem, or allow indi­vid­ual indus­tries to peti­tion the Com­merce Depart­ment for redress if a com­peti­tor nation is using its cur­rency as an export subsidy.

The Chi­nese gov­ern­ment has insisted that the trade imbal­ance is a result of U.S. eco­nomic pol­icy and not the cur­rency exchange, and warned that a uni­lat­eral U.S. move to pun­ish China would dam­age eco­nomic rela­tions. There’s also con­cern about the impact on other aspects of U.S.-China rela­tions, includ­ing China’s mas­sive buy­ing of U.S. gov­ern­ment bonds, con­tin­u­ing efforts to get China to pro­tect intel­lec­tual prop­erty rights and China’s impor­tance in eas­ing ten­sions on the Korean peninsula.

“In the end, such uni­lat­eral action would very likely cause retal­i­a­tion by China and ulti­mately dam­age the U.S. econ­omy, includ­ing exporters, investors, work­ers and con­sumers,” U.S. Cham­ber of Com­merce vice pres­i­dent for gov­ern­ment affairs Bruce Josten wrote in a let­ter to senators.

Oppo­nents argue that the cur­rency sanc­tions would do lit­tle to help the U.S. job mar­ket because more expen­sive Chi­nese goods would sim­ply be replaced by goods from other low-wage coun­tries such as Viet­nam and Bangladesh. They say com­pa­nies such as Wal-Mart would con­tinue buy­ing Chi­nese items because they are deeply involved in invest­ment in China, a fast-growing export market.

But the Alliance for Amer­i­can Man­u­fac­tur­ing, a labor-management part­ner­ship that sup­ports the bill, says a 28.5 per­cent appre­ci­a­tion in the yuan would cre­ate 2.25 mil­lion Amer­i­can jobs and reduce the annual trade deficit by $190.5 billion.

“China responds to con­se­quences, and this leg­is­la­tion will make a real dif­fer­ence for Amer­i­can work­ers and busi­nesses,” the group’s exec­u­tive direc­tor, Scott Paul, said.

Posted by AP News on Oct 10 2011. You can follow any responses to this entry through the RSS Feed. Comments can be made below.