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Senate vote on tariffs for China might wait
By Keith Bradsher (IHT)
Updated: 2006-03-27 08:50

http://www.iht.com/articles/2006/03/26/news/senators.php

A weeklong trip to China by two U.S. senators sponsoring a trade bill
targeting China's currency has revealed differences between them, the
latest in a series of signs that they are less likely to press for a vote
in the Senate in the week ahead.

Senator Charles Schumer, Democrat of New York, and Senator Lindsey
Graham, Republican of South Carolina, have introduced legislation that
would impose a 27.5 percent tariff in two years on all imports to the
United States from China unless Beijing officials allow "substantial"
appreciation in their country's currency.

After a week of meetings with officials in Beijing, Shanghai and Hong
Kong, Schumer and Graham both said in an interview in Hong Kong Saturday
that they remained committed to advancing the legislation unless China
stopped intervening in currency markets and allowed its currency, known
as the yuan, or renminbi, to move higher.

But the senators also said that Schumer had been more impressed than
Graham by promises from Chinese officials to liberalize their currency
policies, although those promises included no timetable.

Asked whether the newest development from the trip was the emergence of
some differences between the two sponsors of the bill, Schumer replied,
"That would be fair."

Schumer said that his views on China's trade and monetary policy had
evolved as a result of the trip and that he believed the Chinese were
taking steps to let the market determine the value of their currency.

"I'm convinced they do want to get there, which I wasn't a week ago," he
said, adding that Graham was more skeptical.

Graham took the same tone he has taken for months on the issue. "The
status quo is devastating to industries back home," he said.

South Carolina's textile industry has been hit hard by Chinese
competition, and its nascent auto parts industry, which has grown up
around the BMW factory near Spartanburg, is beginning to face Chinese
competition.

The practical implications of the senators' differences may be limited
for now. Graham said he wanted to see the results of President Hu
Jintao's visit to the White House in late April and what the Treasury
Department decides in its review at the end of April of whether China
manipulates its currency.

That suggests Graham is also willing to take a wait-and-see approach and
will not press for a vote in the next five days.

Both senators said they had not made a final decision on whether to
follow through on their previous threats to force a vote in the Senate by
Friday and would wait to do so until after further discussions in
Washington with Treasury officials and others.

But differences between the senators could affect policy later,
especially if Chinese officials keep up their recent tilt toward slightly
more conciliatory rhetoric.

Currency traders around the world have followed every remark by the
senators in the past week with rapt attention, especially as China has
allowed its currency to creep up slightly faster in the past three weeks,
possibly because of pressure from the senators.

Governments across the rest of Asia have been reluctant to allow their
currencies to rise against the dollar as long as the yuan remains low,
for fear of losing exports to China. But a strengthening of the yuan
could prompt the monetary authorities from Tokyo to Singapore to allow
appreciation.

The United States is importing almost $6 worth of goods for every $1 of
goods it sells to China.

The Chinese government bought $206.7 billion worth of foreign currencies
last year, mainly dollars, to slow the yuan's rise in value against other
currencies.

That extensive intervention made Chinese goods less expensive in foreign
markets than they would have been without the intervention, and made
U.S., European, Japanese and other imported goods more expensive in China.

China allowed the yuan to appreciate by 2.1 percent on July 21, and the
currency has very gradually appreciated by another one percent since then.

At a news conference Saturday at the U.S. Consulate in Hong Kong, both
senators also addressed a controversy over whether Hutchison Whampoa, a
Hong Kong company, should be allowed to win a contract to screen shipping
containers in the Bahamas for any sign that they are being used to send
nuclear materials to the United States.

Schumer praised the port in Hong Kong for screening all containers bound
for the United States, with the help of a dozen U.S. customs officials
here, and said that his main concern in the Bahamas was that U.S. customs
officials be allowed to supervise the screening there, and not which
company performed the screening.

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