Two US senators came under fire yesterday after they vowed to
force a vote on a bill to impose a 27.5 percent tariff on Chinese
goods, a move that could damage the trade relationship between the
United States and China.
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 government does not 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 Schumber and Graham proposal," said Frank Keating,
president of American Council of Life Insurance (ACLI).
ACLI is a Washington-based trade association whose 377 member
companies account for 91 percent of the life insurance industry's
total assets in the United States.
"It is encouraging to see that Schumber said he didn't expect
the bill to go anywhere," added Keating, a former Oklahoma governor
who has also served under Presidents Ronald Reagan and George H.W.
Bush.
"It is impossible for this legislation to pass," said Mei Xinyu,
a trade researcher at the Chinese Academy of International Trade
and Economic Co-operation. "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 wants to use the threat of tariffs to spur Chinese
officials to boost the yuan and doesn'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 plans to end exchange controls on the yuan and open its
financial markets, but gave no timetable.
"We will 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."
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 the bill 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 United States.
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 would demand
a vote before Saturday unless China takes more steps toward
revaluing soon.
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)