Huffpost Politics

House Overwhelmingly Passes Trade Sanctions Bill Targeted At China

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WASHINGTON (AP) -- The House has approved legislation that would allow the U.S. to seek trade sanctions against China and other nations for manipulating their currency to gain trade advantages.

The 348-79 vote Wednesday sends the measure to the Senate, where its prospects are unclear. Senate supporters hope to get a vote on a similar proposal after Congress returns following the November congressional elections.

Supporters said the bill would allow the Obama administration to pressure China on an issue that they say has led to the loss of more than 2 million manufacturing jobs in the U.S. over the past decade.

The vote came as lawmakers scrambled to wrap up unfinished business so they can hit the campaign trail with a little over a month before the Nov. 2 elections. Polls show that the state of the economy and an unemployment rate that remains stuck at 9.6 percent are the top concerns of voters.

The measure was passed by a wide margin with 99 Republicans joining Democrats to vote yes. Those in opposition included 74 Republicans and five Democrats.

Supporters said the size of the vote should send a strong message to Beijing that Washington will not tolerate currency manipulation and other trade practices viewed as unfair to American workers.

House Speaker Nancy Pelosi said that in 20 years America's trade deficit with China has gone from $5 billion annually to $5 billion every week, an imbalance she said demanded action by Congress to protect American jobs.

"We do this because 1 million American jobs could be created if the Chinese government took its thumb off the scale and allowed its currency to respond to market forces," she said in a speech on the House floor.

American manufacturers contend that China's currency is undervalued by as much as 40 percent against the dollar. That makes Chinese products cheaper and more competitive in the United States and American products more expensive in China.

The legislation would allow the imposition of stiff sanctions on Chinese imports. It would expand the definition of improper government subsidies to include a government's manipulation of its currency to gain trade advantages. Currently, the Commerce Department does not consider currency manipulation as a government subsidy for which it can impose trade sanctions.

During the House debate, supporters cited studies that they said show the legislation would boost American exports and create more manufacturing jobs in this country.

"Some credible estimates are that we could return a million American jobs to this country," said Rep. Xavier Becerra, D-Calif., in urging support for the legislation. "We can either take bold steps or we can take baby steps."

Opponents said the legislation would boost the cost of clothing, toys and other goods that American consumers buy and also ran the risk of sparking retaliation by China against American exports.

"The available evidence is that the price of many of these Chinese goods will go up 10 percent, a pair of shoes that a mother needs for her child to go to school ... toys at Christmas, all become more expensive," said Rep. Jeb Hensarling, R-Texas.

Supporters rejected that argument, saying it is critical in hard economic times to protect U.S. jobs.

"Without a job, you can't buy goods at any price. This bill is about jobs," said Ways and Means Committee Chairman Sander Levin, D-Mich.

Passage of the proposal was cleared when Levin led an effort to craft a compromise proposal that supporters believe will be better able to withstand a challenge before the World Trade Organization, the Geneva-based group that oversees the rules of world trade.

Before the House vote, Chinese officials in Beijing reiterated that they support exchange rate flexibility but offered no new indications that they plan to accelerate the revaluation of their currency, the yuan.

In June, Beijing promised a more flexible exchange rate but since that time the yuan has risen by only about 2 percent in value against the dollar.

Treasury Secretary Timothy Geithner told Congress earlier this month that the administration stands ready to find a more effective strategy for pressuring China. He said the administration is not only focused on the currency issue but on such topics as rampant copyright piracy of U.S. products and various barriers the Chinese have erected to U.S. goods.

In a statement, the Treasury Department said, "Today's vote clearly shows lawmakers have serious concerns about this issue. The president and Secretary Geithner share those concerns. They have said repeatedly that China needs to allow a significant, sustained appreciation over time."

The administration has not taken a position on whether it will support the House bill. But trade experts said they believed the administration will use its passage as a way to pressure Beijing to accelerate its appreciation efforts.

President Barack Obama raised the currency issue in a meeting with Chinese officials last week in New York. He is expected to pursue the issue in November at the summit of the Group of 20 major economies in South Korea.

Sen. Charles Schumer, D-N.Y., who is pushing a similar China currency bill in the Senate, said after the House vote that he will work to get a Senate vote on his bill during a lame-duck session of Congress after the November elections.

"The Chinese ought to be aware that Congress is serious about confronting their currency manipulation," Schumer said in a statement.

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