Currency bill ‘may be wrong approach’

Oct 03, 2011 | 06:30 PM | Catherine Ngai

Tags  currency, Senate, Dave Phelps, Tom Gibson, Tom Danjczek, USTR, WTO, China manipulation

NEW YORK — The U.S. Senate was expected to pass currency legislation Monday night aimed at cracking down on illegally subsidized imports, although some economists and trade interests argue that the bill takes the wrong approach.

The Currency Exchange Rate Oversight Reform Act, introduced by a bipartisan group of senators, would allow U.S. manufacturers to use domestic trade laws to offset alleged currency manipulation (AMM, Oct. 3). And while most domestic steel and manufacturing groups argue that the legislation is needed to ensure fair trading with countries like China, others claim the approach may be more of a "Band-Aid solution" that fails to address deep, underlying issues.

"We agree that the Chinese currency is undervalued, but we think that this isn’t the proper way to handle this," said David Phelps, president of the American Institute for International Steel (AIIS). "Currently, the administration’s policy on the yuan is through high-level government-to-government discussion. The idea of getting Congress or (the U.S. Department of) Commerce to determine proper value is good political grandstanding but bad government policy. It’s political. We don’t want the value of the currency determined by bureaucrats and politicians. We want it determined by the marketplace." ....