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Lawmakers launch new effort to pass China currency bill

U.S. Secretary of Treasury Jack Lew in the East Room of the White House in Washington, March 4, 2013. REUTERS/Larry Downing
U.S. Secretary of Treasury Jack Lew in the East Room of the White House in Washington, March 4, 2013. REUTERS/Larry Downing

By Doug Palmer

WASHINGTON (Reuters) - A bipartisan group of lawmakers began a new attempt on Wednesday to pass legislation that puts pressure on China to change its currency practices, reviving an effort that previously failed to make it to the finish line.

The legislation, which has 101 co-sponsors, is similar to bills that passed the House of Representatives in 2010 and the Senate in 2011, but ultimately failed to win final congressional approval.

It came as Treasury Secretary Jack Lew was wrapping up a two-day visit to China, where he pressed Beijing to allow the yuan to rise further against the dollar.

"China's exchange rate should be market-determined. That's in our interest and China's interest. They recognize the need to do it for internal reasons as well," Lew told reporters.

Although China's yuan has appreciated 16 percent in real terms against the dollar since June 2010 and hit an all-time high against the dollar on Wednesday, many lawmakers believe Beijing keeps it at an artificially low value to give Chinese companies an unfair trade advantage.

Representative Sandy Levin of Michigan, the top Democrat on the House Ways and Means Committee, introduced the currency bill with fellow Democrat Tim Ryan of Ohio and Republican lawmakers Tim Murphy of Pennsylvania and Mo Brooks of Alabama.

"Currency manipulation by our trading partners has been going on for far too long, with American workers feeling the impact through lost jobs and lower wages," Levin said.

It is supported by U.S. labor groups and domestic textile, steel and other manufacturers that compete in the U.S. market against Chinese imports.

"It's clear the administration is not going to do enough to really press China on currency. That's why congressional action is so important," said Scott Paul, president of the Alliance for American Manufacturing.

But some business groups such as the U.S.-China Business Council have fought the legislation, fearing it would worsen trade ties.

The bill would allow U.S. companies to seek countervailing duties against Chinese goods on a case-by-case basis to offset any exchange rate advantage.

After the Senate passed a similar bill in 2011, Republican House Speaker John Boehner blocked a vote in the House because he said he was worried it could start a trade war.

"This is the year that Speaker Boehner and (Ways and Means Committee) Chairman (Dave) Camp should free the currency bill, or they will show they are completely out of step with the American people, Republicans in Congress, and the vast majority of Republican voters," Paul said.

FALLING YEN

Many U.S. lawmakers also believe Japan is unfairly driving down the value of its yen to help the country export its way out of decades of slow growth.

That has increased pressure on the Obama administration to use talks on a proposed free trade agreement in the Asia-Pacific region to craft rules against currency manipulation, particularly if Japan is allowed into the talks in coming months.

At a Senate Finance Committee hearing on Tuesday, acting U.S. Trade Representative Demetrios Marantis avoided taking a stand, but said the administration was exploring the costs and benefits of including currency in the Asia-Pacific trade talks.

Aluisio de Lima-Campos, a Brazilian trade scholar, has proposed that countries such as Brazil and the United States bring a number of countervailing duty cases against China to pressure it into negotiations on new currency rules.

In a visit to Brasilia this week, acting U.S. Commerce Secretary Rebecca Blank played down the idea of using countervailing duties to try to correct currency imbalances.

"Our countervailing duties efforts have a very different focus. They are really designed to enforce fairness, a leveled playing field for U.S. companies and to make sure that everybody is abiding by the (World Trade Organization) rules," Blank told reporters.

(Additional reporting by Alonso Soto in Brasilia; Editing by Eric Beech and Peter Cooney)

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