From: / Will Leahy, Manager, China Policy
To: / Asia Task Force, China AmChams
I) Clinton and Obama Co-sponsor Baucus-Grassley
Senators Hillary Clinton (D-NY) and Barack Obama (D-IL), both leading candidates for the Democratic presidential nomination, have agreed to co-sponsor the “Currency Exchange Rate Oversight Reform Act of 2007” (S. 1607), recently introduced by Senators Max Baucus (D-MT), Charles Grassley (R-IA), Chuck Schumer (D-NY), and Lindsay Graham (R-IA).
Some experts believe that their support for the bill—which, among other provisions, allows U.S. companies to seek anti-dumping duties on imports from nations deemed to have “misaligned currencies”—indicates that the trade imbalance with China, and a perceived lack of effective action on the part of the Bush Administration to address it, will emerge as an issue in the 2008 Presidential election.
Senator Obama began to publicly position himself on the issue in a June 13thletter to Treasury Secretary Paulson after the Treasury Department declined to label China a currency manipulator in its semi-annual report on international economic policy and exchange rates. Obama wrote that, in light of Bush Administration inaction, he would work “with colleagues in the Congress to force action and strengthen the ability of Americans losing out from Chinese currency manipulation to bring forward complaints for remedy through increased duties on Chinese goods.”
In addition to its implications for the Presidential race, many observers believe that Clinton and Obama’s sponsorship of the bill, along with that of Orrin Hatch (R-UT), helps to pave the way for broader Senate support. The stated goal among those who introduced the bill is to gain passage with a veto-proof margin. This goal was potentially undermined, however, with the introduction of currency-related legislation by the chairs of the Senate Banking Committee, Chris Dodd (D-CT) and Richard Shelby (R-AL). Asserting jurisdiction over the issue, Dodd and Shelby introduced legislation (S.1677) that would, among other things, tighten the definition of currency manipulation.
It remains unclear how jurisdictional issues among the Senate Banking and Finance Committee’s will be reconciled. In recent public and private statements, Senator Baucus and his staff have asserted that they will move their bill through mark up prior to the August recess.
In an op-ed published earlier today in the Financial Times (subscription required), Senators Baucus, Grassley, Schumer and Graham argued that, “existing US currency oversight provisions were crafted two decades ago for a world economy that bears little resemblance to today’s. The solution is to repeal these outdated provisions and replace them with an approach that is firm but fair, targets no single country and is consistent with WTO rules.”
II) Consumer Safety Concerns Continue
The U.S. Consumer Product Safety Commission announced yesterday three more recalls of goods from China, covering jewelry that the agency said could cause lead poisoning, as well as a magnetic building set and plastic castles with small parts, which it said could choke children.
The announcement follows several other recalls on Chinese products in recent months:
  • In April, tainted ingredients from China resulted in the largest pet food recall in U.S. history;
  • 1.5 million Chinese-made toys were recently recalled when lead was discovered in the paint;
  • More than two dozen Chinese-made toothpaste brands have been banned by the FDA;
  • The National Highway and Traffic Safety Administration is currently advising a recall of up to 450,000 tires made by one of the largest Chinese tire manufacturers;
  • Most recently the FDA banned five types of Chinese seafood.
These incidents have elicited an increasingly strong reaction from Capitol Hill:
  • Senator Dick Durbin (D-IL)—Senate Majority Whip, and a member of the Appropriations Subcommittee on Agriculture, Rural Development, Food and Drug Administration, and Related Agencies—has, along with Rep. Rosa DeLauro (D-CT), been calling for the Food and Drug Administration to negotiate a comprehensive Memorandum of Understanding on food safety with China.
  • The House Energy and Commerce committee’s Consumer, Oversight and Health Subcommittee will likely hold hearings before the August recess examining import safety issues.
  • Finally, it has been reported that Durbin and House Energy and Commerce committee Chair John Dingell (D-MI) will likely introduce bills in the House and Senate that would impose a user fee on imports to help pay for a strengthened inspection system.

This message and its contents are intended solely for the use of the Asia Task Force addressee. If you have received this message in error, please notify the sender immediately.
/ The U.S. Chamber of Commerce's is the world's largest business federation, representing 3 million businesses and organizations of every size, sector, and region.

U.S. Chamber of Commerce | 1615 H Street, NW | Washington, DC20062-2000