A coalition of 51 trade associations in a letter to Senate leaders Wednesday opposed efforts to advance a bill pressuring China to speed up appreciation of its currency, which critics say makes the dollar more expensive by comparison and hurts U.S. exports.
While acknowledging that China needs to do more to move to a market-oriented exchange rate for the yuan, the coalition said unilateral legislation would be “counterproductive” in terms of getting China to reform its currency policy and address other problems such as intellectual property rights violations, restrictions on market access, liberalizing financial services, and discriminatory industrial policies.
Penalizing China for its currency policy would do little to create domestic jobs because manufacturers would respond to rising production costs by shifting production to other low-cost countries, the letter said.
Business groups expressed support instead for multilateral action at the G-20 and the Asia Pacific Economic Cooperation forum to pressure China on its trade policies.
Majority Leader Harry Reid has agreed to a floor vote in early October on a China currency bill that would allow the government to impose countervailing duties on China by defining currency manipulation as an export subsidy.
“Legislation that would increase tariffs on imports from China is unlikely to create any incentive for China to move expeditiously to modify its exchange policies. Rather, it would likely have the opposite effect and result in retaliation against U.S. exports into China -- currently the fastest-growing market for U.S. exports,” the letter said.
The business groups said the legislation would draw international attention away from China’s behavior to U.S. attempts at protectionism.
Trying to determine the true exchange rate in order to apply countervailing duties would like be a politicized process that would draw scrutiny from the World Trade Organization, the letter added.
Signatories to the letter include the Business Roundtable, the U.S. Chamber of Commerce, the Retail Industry Leaders Association, the Aerospace Industries Association and the American Apparel & Footwear Association.
Unions and some domestic manufacturers favor the legislation.