Senate Panel Approves Currency Bill

[Newbiewar]

http://news.moneycentral.msn.com/ticker/ar...2&Symbol=GM

WASHINGTON (AP) - A Senate panel overwhelmingly approved legislation Thursday that would give the United States additional tools to pressure China and other countries accused of manipulating the value of their currencies.

The bill, sponsored by Sens. Max Baucus, D-Mont., and Charles Grassley, R-Iowa, passed the Senate Finance Committee by a bipartisan vote of 20-1.

The measure would apply "to any trading partner with (an) out-of-whack currency," Grassley said. And because many of the bill's punitive measures don't kick in for six months or a year, "It's a velvet glove with a steel fist inside," he added.

The vote comes before Treasury Secretary Henry Paulson travels to Beijing next week to discuss the currency dispute and other economic issues, such as product safety.

The Treasury Department issued a statement saying it recognizes Congress wants to send a strong message but it believes "direct, robust discussions with the senior Chinese leaders, not legislation, is the best means of achieving progress."

Sen. Maria Cantwell, D-Wash., was the lone committee member to vote against the bill, which she said could spark retaliation by China, resulting in "unintended consequences" for U.S. companies and consumers. She wants the U.S. to press China to make legal reforms and improve its intellectual property protection, a key issue for Microsoft Corp., located in Redmond, Wash.

Several bills were introduced this year aimed at punishing China and other alleged currency manipulators. Business groups representing manufacturers such as General Motors Corp., Honeywell International Inc. and General Electric Co. say anti-trade sentiment in Congress is strong enough to override a likely presidential veto of a currency bill.

The measure approved Thursday does not specifically mention China and is not as punitive a bill as the proposal before the Senate last year that would have imposed an across-the-board tariff on Chinese imports.

Baucus and Grassley introduced their bill last month, after the Treasury Department refused to cite China as a currency manipulator in a semiannual report to Congress.

U.S. manufacturers and many members of Congress say that China keeps its currency, the yuan, undervalued by as much as 40 percent against the U.S. dollar to gain an unfair trade advantage. The cheaper currency means that China's exports to the United States are less expensive.

Sen. Charles Schumer, D-N.Y., who sponsored legislation last year with Sen. Lindsey Graham, R-S.C., that would have slapped a 27.5 percent tariff on Chinese goods, helped develop the Baucus-Grassley proposal.

"Our objective this year should be to pass the strongest possible bill we can with the largest possible vote that we can," Schumer said.

The legislation would require the Treasury secretary to identify countries with "fundamentally misaligned" currencies and take steps to punish those countries, such as initiating a World Trade Organization dispute if the currency remains misaligned for a year.

A country's currency is defined as misaligned if its government is intervening in the markets to alter the value of the currency, or if the government imposes currency controls, among other criteria, a summary of the bill said.

Senate Banking Committee Chairman Chris Dodd, D-Conn., and Sen. Richard Shelby, R-Ala., the top Republican on the panel, have proposed competing legislation. Their bill would tighten the definition of currency manipulation to make it more likely that a country like China would be cited as a manipulator in Treasury reports.

A citation would require Treasury to enter negotiations with the country and consult with the International Monetary Found on the issue.

The two senators said in a July 25 letter to Baucus and Grassley that the Banking Committee would consider their legislation next week.

The China Currency Coalition, which includes steel makers such as Nucor Corp. and the AFL-CIO labor federation, has endorsed a third bill introduced by Reps. Timothy Ryan, D-Ohio, and Duncan Hunter, R-Calif. That proposal would define currency manipulation as a government subsidy and would enable the United States to impose tariffs to counteract the subsidy.

The Hunter-Ryan bill, as well as other China-related legislation, will be discussed during a House Ways and Means hearing Aug. 2.

David A. Hartquist, counsel to the coalition, nevertheless praised the Senate Finance Committee's move.

"This is a very significant step forward in terms of putting pressure on the Chinese government and the Bush administration," he said.

[Newbiewar]

i think this will massively affect much of the ecconomy of these countrys... for example toyota, sony, etc...

if a 27.5% tax was put on toyotas... they wouldnt be marketable in america would they?

such a tax would give the american companies a much needed financial break while the other countries re-esatblished their prioritys...

we've been bitching about japan doing this for years... if the president were to approve such a bill then it sure would be a mighty steel fist...

[AxelTheRed]

Jesus f@#king Christ! Its about goddamned time this happened!

The only thing standing in the way of fair trade for this country is our dip$h! of a President...let's just hope the idiot doesn't screw it up.

Edited July 27, 2007 by AxelTheRed

[regfootball]

we have a president? when ? is it 2009 yet?

[andy82471]

i think this will massively affect much of the ecconomy of these countrys... for example toyota, sony, etc...

if a 27.5% tax was put on toyotas... they wouldnt be marketable in america would they?

such a tax would give the american companies a much needed financial break while the other countries re-esatblished their prioritys...

we've been bitching about japan doing this for years... if the president were to approve such a bill then it sure would be a mighty steel fist...

I don't think the bill effects JAPAN as the article only mentions CHINA. I doubt we will see and import taxes levied against TOYOTA or HONDA since most of their high volume cars are actually built in this country.

[Z-06]

I don't think the bill effects JAPAN as the article only mentions CHINA. I doubt we will see and import taxes levied against TOYOTA or HONDA since most of their high volume cars are actually built in this country.

Agreed, but their components are shipped from Japan!

[Intrepidation]

Jesus f@#king Christ! Its about goddamned time this happened!

The only thing standing in the way of fair trade for this country is our dip$h! of a President...let's just hope the idiot doesn't screw it up.

I don't think the bill effects JAPAN as the article only mentions CHINA. I doubt we will see and import taxes levied against TOYOTA or HONDA since most of their high volume cars are actually built in this country.

The measure approved Thursday does not specifically mention China and is not as punitive a bill as the proposal before the Senate last year that would have imposed an across-the-board tariff on Chinese imports.

[bowtie_dude]

I normally don't support tariffs on imported goods because that impedes free trade. However, so does currency manipulation. Its good to see government pressure on this issue.

[CARBIZ]

Maybe someone in Washington woke up!

The current account deficit with the Asian countries cannot be supported forever. At some point, Japan, China, Thailand and others will own more T-bills than the U.S. has money in circulation!

On the one hand, it is great that neither China or Japan can now afford to make a run on the U.S. currency (as has been tried before), because it is tied to their own financial health; however, if you keep borrowing money from your neighbor so that he can then turn around and renovate your house - well, eventually your neighbor will end up owning your house.

I would like to think (hope) that there has been a decades long conspiracy in Washington to "tie" the Asians to our economy so that they have to be our friends, but I doubt I could give either of our governments enough credit for actually planning that.

[Newbiewar]

I don't think the bill effects JAPAN as the article only mentions CHINA. I doubt we will see and import taxes levied against TOYOTA or HONDA since most of their high volume cars are actually built in this country.

the bill doesnt mention china either...

the bill doesnt mention any of them... but what it does mention is a country that alters its currency to sell stuff cheaper to america... and japan has been blamed for that numerous times... expecially by gm fanatics... now im in a pinch of time... but... i'm sure someone can provide some evidence to suggest this as being true enough for the bill to apply to japanese products

[gm4life]

I see this as good thing. Not that we send much over there, but won't they knock us good on our stuff? This still sounds good to me. Charles Grassly is from my state, actually met the man he is a straight shooter. I would apperciate all the president bashing to stop. Keep in my mind some of the folks on here still have alot of respect for him and what he has done for our country.

[Intrepidation]

If he doesn't approve the bill I can tell you now it'll get a lot worse.

[CARBIZ]

I see this as good thing. Not that we send much over there, but won't they knock us good on our stuff? This still sounds good to me. Charles Grassly is from my state, actually met the man he is a straight shooter. I would apperciate all the president bashing to stop. Keep in my mind some of the folks on here still have alot of respect for him and what he has done for our country.

What we 'send over there' are raw materials, which they need to survive, and our technology. In the rush to build our factories in Communist China, we forget that they are still a totalitarian State. They are only too happy to let us build our factories over there, in finely orchestrated 'partnerships' so that we can show them a better way to do things, then they can beat us over the head with our own technology.

In the rush to craziness, Westinghouse is going to build 3 or 4 nuclear reactors in China. That makes a great photo-op, but I'm not too sure sharing nuclear technology is the way to go.

The National Post wrote a piece today about how Hyundai exports vehicles to Canada but builds nothing here. The author then proceeds to gloss this over with a comparison of the $300 million in paper pulp that Canada exports? Is he kidding? First of all, a one for one comparison is just silly. Canada has a huge trade deficit with Korea, for sure. On another level, how the hell can one compare the $300 million in lousy tree pulp to the BILLIONS of dollars worth of cars that Korea ships here. He conveniently forgets to put a price tag on the value of those imported cars to Canada, although he boasts they amount to about a half million units in the past few years.

Edited July 27, 2007 by CARBIZ

[gm4life]

You make a good point.

[Drew Dowdell]

In the rush to craziness, Westinghouse is going to build 3 or 4 nuclear reactors in China. That makes a great photo-op, but I'm not too sure sharing nuclear technology is the way to go.

Isn't Westinghouse building the reactors that were partially developed by the Chinese and are of a style that are banned in the U.S. anyway?

[mustang84]

I don't think the bill effects JAPAN as the article only mentions CHINA. I doubt we will see and import taxes levied against TOYOTA or HONDA since most of their high volume cars are actually built in this country.

As long as Toyota and others keep increasing its exports to the US like they have been doing this year, I say stick them with this bill. It's time the currency manipulation loophole is closed for good.

http://www.detnews.com/apps/pbcs.dll/artic.../707130388/1148

[regfootball]

when the asians take us over, at least I'll enjoy what's on the menu......chinese, mongolian, all good stuff. I won't be very hip about the chopsticks bit though.

[Newbiewar]

when the asians take us over, at least I'll enjoy what's on the menu......chinese, mongolian, all good stuff. I won't be very hip about the chopsticks bit though.

hey chopsticks... i feel very cultivized knowing i enjoy eating my japanese food like that...

[Intrepidation]

I like chopsticks...

[GXT]

I, for one, wouldn't enjoy paying 40% more for everything made in China. Thanks for helping to degrade my quality of life. Well done.

Nor would I want other countries to tell the US that the Fed isn't allowed to change interest rates, or that they aren't allowed to run irresponsible deficits to fund tax cuts and wars as it seriously devalues the US dollar.

CARBIZ, you as a Canadian should recognize this as yet another heavy-handed move by the US to bully other countries into playing the game by THEIR rules.

[intrigued]

GXT,

This may cause a period of cheaper imported goos across the board but long term it would greatly help both our domestic auto buisnesses and econemy in general. This bill doesn't say that we are going to automatically put a tariff or citation on a country if they change their intrest rate. It is here to prevent unfair market laeveraging and manipulation of money and inrest rates to allow for unfair competition. I for one wholeheartedly agree with our ellected representatives for a change.

This bill could single handedly restore the domestic auto buisness as well as largley revive the middle class. If it's no longer worth it for US companies to manufacture and import things from China and Japan then they might as well bring the jobs back to the U.S.

I really hope this bill goes through.

[CARBIZ]

I, for one, wouldn't enjoy paying 40% more for everything made in China. Thanks for helping to degrade my quality of life. Well done.

Nor would I want other countries to tell the US that the Fed isn't allowed to change interest rates, or that they aren't allowed to run irresponsible deficits to fund tax cuts and wars as it seriously devalues the US dollar.

CARBIZ, you as a Canadian should recognize this as yet another heavy-handed move by the US to bully other countries into playing the game by THEIR rules.

Regardless of what Washington's motives are, nobody can deny the fact that the United States cannot sustain the current account deficit that it has been running for the past few years. If Americans keep buying cheap imported goods which they are financing by selling T-bills to those same countries making the cheap imported goods, eventually Fort Knox will be mortgaged to the nostrils.

Wall Street may be calling the shots, but when push comes to shove, you cannot eat Securities!

[FUTURE_OF_GM]

CARBIZ, you as a Canadian should recognize this as yet another heavy-handed move by the US to bully other countries into playing the game by THEIR rules.

And how is that a bad thing again?

[vrazzhledazzle]

i think this will massively affect much of the ecconomy of these countrys... for example toyota, sony, etc...

if a 27.5% tax was put on toyotas... they wouldnt be marketable in america would they?

Well its an economy they don't deserve -- their economy wouldn't have grown so much (look at China's) if they didn't play this game. And its a huge slap in the face that while China keeps their currency undervalued, they impose a 100% tax on any foreign cars not assembled in China.

And yes, Toyota can easily move their cars. Their profit margins would just be lowered. As it is now, Toy can sell Camry's for 17k and still make profit equal to that of American Big3 thanks to weak currency, no healthcare costs for employees and simply no unions of any kind.

[haypops]

if a 27.5% tax was put on toyotas... they wouldnt be marketable in america would they?

Toyota already pays a 25% tax on imported trucks such as Landcruiser, 4-Runner, and the FJ-40 and some Lexus trucks I can't be bothered remembering (or can't afford).

no healthcare costs for employees

Not true for the sizable amount of sales that are produced here.

simply no unions of any kind.

Not true for the sizable Toyota production in California. Likewise since Toyota is Delphi's second largest customer, they pay for union wages indirectly.

----------------------

I shouldn't have to defend myself this way but:

my vehicles are 1996 GMC Sonoma, 1999 Pontiac Grand-Am, and 2007 Chevy HHR.

The last two vehicles for famiy members who don't live with me whose purchase I finacially and spiritually participated in: 2005 Chevy Silverado, and 2007 Saturn ION. Hardly the record of an import humper.

[Newbiewar]

Toyota already pays a 25% tax on imported trucks such as Landcruiser, 4-Runner, and the FJ-40 and some Lexus trucks I can't be bothered remembering (or can't afford).

Not true for the sizable amount of sales that are produced here.

Not true for the sizable Toyota production in California. Likewise since Toyota is Delphi's second largest customer, they pay for union wages indirectly.

----------------------

I shouldn't have to defend myself this way but:

my vehicles are 1996 GMC Sonoma, 1999 Pontiac Grand-Am, and 2007 Chevy HHR.

The last two vehicles for famiy members who don't live with me whose purchase I finacially and spiritually participated in: 2005 Chevy Silverado, and 2007 Saturn ION. Hardly the record of an import humper.

sure, not sure if 25% tax is correct, and again what is the taxed based on... but.. those vehicles that u mentioned are the worst sellers, theyve been selling for years but so units, because of their price difference to their competetors...

land cruiser? 60k?

but anyway... consider another 20% tax or so... but all this is telling japan, lets play fair... and you dont have to worry about this tax... so all it does it take the profits away from the outside corpetations... to make it a fair playing feild for the american companies...

hopefully this law will pass because obsessive profits are only hurting us and not really benifiting them...

[haypops]

sure, not sure if 25% tax is correct, and again what is the taxed based on... but.. those vehicles that u mentioned are the worst sellers, theyve been selling for years but so units, because of their price difference to their competetors...

land cruiser? 60k?

True Land Cruiser is on few people's shopping list but 4-runner, Fj-40 have about 90,000 units ytd (combined) and Sienna another 80,000 units.

[ToniCipriani]

CARBIZ, you as a Canadian should recognize this as yet another heavy-handed move by the US to bully other countries into playing the game by THEIR rules.

And how is that a bad thing again?

Don't forget Canada's biggest customer is the US.

Perhaps "bullying" isn't the right word, more so taking a stick and beating some sense. Nobody should be bullying anybody. China acknowledges its problems, but it's slow in acting. Their growth is simply mathematically unsustainable. The longer China holds in a state like this, the more catastrophic the damage will be to the WHOLE global economy.

[Brandon Lutz]

About time. Too bad this couldn't have been done about 12 to 20 years ago. Countries like Japan have been getting away with this for a loooooong time.

[siegen]

Agreed, but their components are shipped from Japan!

Well not exactly, but close. For all cars sold in 2006, the average percentage of parts that came from North America in a Toyota vehicle was 48%. That's compared to 60% for Honda, 45% for Nissan, and 80% for GM. See this thread (the article at Detroit Free Press has expired though).