Get-Tough-On-China Sentiment Re-Emerges (Congress Daily)

By Peter Cohn

Labor and consumer groups, as well as some domestic manufacturers hurt by Chinese imports, are ratcheting up pressure on Democratic leaders to move legislation dealing with what they characterize as China's unfair trade practices.

The subject was to be discussed at this week's House Democratic retreat at Williamsburg, Va., and a group of freshman Democratic senators Thursday wrote to Senate Majority Leader Reid urging him to make China trade legislation a priority.

"We face a host of difficult trade issues with China that require strong action, ranging from currency manipulation and unfair subsidies, to trade law and counterfeit enforcement problems, to imported food and product safety. These issues are hurting American competitiveness and expose American consumers to unsafe goods," states the letter from the eight freshmen.

The Democratic senators, all of whom ran in 2006 on trade issues, include Sens. Sherrod Brown of Ohio; Benjamin Cardin of Maryland; Robert Casey Jr. of Pennsylvania; Amy Klobuchar of Minnesota; Jon Tester of Montana; Jim Webb of Virginia; Sheldon Whitehouse of Rhode Island, and Bernie Sanders of Vermont, an Independent who caucuses with the Democrats.

A variety of China-related bills were introduced in the last Congress, including one from Senate Finance Chairman Baucus, which would impose penalties on China for devaluing its currency, the yuan. Baucus' bill has bipartisan Senate support.

Backers argue that allowing the yuan to float against the dollar would make it easier to sell U.S. goods in China and more expensive for them to export goods.

A bill by Senate Banking Chairman Dodd would open the Chinese government to legal challenges through the International Monetary Fund and World Trade Organization.

House Ways and Means Democrats have been exploring legislation dealing with China for over a year. Ways and Means Trade Subcommittee Chairman Sander Levin, D-Mich., had been expected to introduce a bill early this year to prod China to revalue its currency, and perhaps allow anti-dumping and countervailing duties to be levied to alleviate the impact on U.S. exports of a devalued yuan.

That plan ran into concerns from pro-business Democrats on the panel. They suggested hearings should be held first to further explore the issue before any legislative action was taken.

Levin said he expects hearings soon but did not set a timetable.

"There are serious discussions taking place," he said.

Rep. Michael Michaud, D-Maine, co-chairman of the House Trade Working Group, said he feared that industry's clout could hinder any action on the part of Democrats in Congress.

"My concern is the large multinational corporations who have a lot of interest in Congress doing nothing on currency manipulation, and I think that's an issue that's important not only to the Democratic Party but Republicans," he said.

Many U.S. and multinational businesses oppose legislation penalizing China, arguing it could put them at risk of retaliatory action.

Groups such as the U.S.-China Business Council, which represents about 250 companies, argue that China has been making advances in its trade commitments at the WTO and should not be singled out.

The Bush administration also opposes legislation. "We are looking for the result, not the headline," Trade Representative Schwab said in a Jan. 17 speech. "This is not a good time for Congress to be seeking quick fixes to complex international economic challenges."

"We need to be deliberative about this," said Rep. Joseph Crowley, D-N.Y., a Ways and Means member who favors a go-slow approach to China legislation. "The Chinese are actually making some headway in terms of devaluation of their currency. ... This is too big of an issue to simply rush into something."

Another Ways and Means Democrat, Rep. Jim McDermott of Washington -- whose state has considerable business interests in China, including companies like Boeing and Microsoft -- counseled against hasty action.

He said now is not a particularly good time to move legislation with the Beijing Olympics coming this summer.

"Slapping them upside the head is not necessarily the best way to get what we want. There's a good bit of reluctance on the part of some to move, particularly around the time of the Olympics," McDermott said.

"This is a huge face issue, and to ever lose face in the midst of that, when they're trying to come into the 21st century and come into the developed world, I think has got to be thought through. I'm one of those who is very reluctant to leap at something that sounds good, makes good sound bites, and may not be good policy."

Regardless of the concerns, the issue of China trade is one that has a great deal of momentum among members of both parties, including on the campaign trail.

Two lobbyists who follow trade issues said with the 2008 elections looming, any China trade bill -- no matter what it is -- is likely to garner at least 300 votes on the House floor and 70 in the Senate.

Even if President Bush vetoes it as expected, it would serve its intended purpose by helping members in tough re-election fights at home.