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Oct. 6 (Bloomberg) -- The Senate advanced legislation letting U.S. companies seek duties to compensate for an undervalued Chinese yuan, setting up a vote on the measure as soon as today.
The Senate approved 62-38 a motion limiting debate on the bill backed by Democrats such as Senators Sherrod Brown of Ohio and Charles Schumer of New York and Republicans including Lindsey Graham of South Carolina and Jeff Sessions of Alabama.
The legislation, opposed by business groups such as the U.S. Chamber of Commerce, may stall in the House. Republican Speaker John Boehner of Ohio said today that the bill could start a trade war.
“To force the Chinese to do what is arguably very difficult to do I think is wrong, it’s dangerous,” Boehner said today at the Washington Ideas Forum, sponsored by Atlantic magazine and the Aspen Institute. “Given the economic uncertainty around the world, it’s just very dangerous and we should not be engaged in this.
‘‘I frankly think the president agrees with me but why isn’t the president speaking out?,” Boehner said. “Is he too busy campaigning?”
President Barack Obama said at a press conference today that while “China has been very aggressive in gaming the trading system to its advantage and to the disadvantage of other countries, particularly the United States,” he wants to make sure the U.S. doesn’t pass laws that “are symbolic, knowing that they’re probably not going to be upheld by the World Trade Organization.”
Schumer’s Past Efforts
Schumer, who has proposed similar measures on China’s currency over the past six years, has failed so far to get an up-or-down Senate vote on a bill.
Supporters say the legislation has a better chance of passing the Senate this time because China, the world’s second- biggest economy after the U.S., has become a target for lawmakers frustrated by the widening trade deficit with that nation and domestic unemployment stuck at 9.1 percent.
The bill mandates that the Treasury Department identify misaligned currencies, instead of finding that a currency was manipulated, as is currently required. Governments that undervalue their currencies and don’t take corrective action would face penalties, including increased dumping duties, a ban on federal procurement in the U.S. and ineligibility to receive financing form the Overseas Private Investment Corporation.
The yuan has appreciated 5.1 percent against the U.S. dollar in the past year and 24 percent in the past five years, the steepest advance among 25 emerging-market currencies tracked by Bloomberg. China limits currency conversions for investment purposes and buys dollars to slow the yuan’s advance and preserve the competitiveness of China’s exports.
--With assistance from James Rowley and Roger Runningen in Washington. Editors: Steve Geimann, Larry Liebert
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