Obama skeptical of Senate currency bill

(People's Daily Online)

08:24, October 08, 2011

Beijing--U.S. President Barack Obama has expressed his reservations about a contested Senate bill aimed at pressuring China to revalue its currency, saying it may not "actually work". 

Telling reporters in Washington on Thursday, Obama, who is facing a reelection bid in 2012 amid difficulties to create jobs for American voters, accused China of "gaming" trade by keeping its currency, the yuan, weak. However, Beijing has repeatedly said that it did not want to seek a deliberate huge trade surplus with the US. 

"China has been very aggressive in gaming the trading system to its advantage and to the disadvantage of other countries, particularly the United States," Obama told a news conference focused on his bid to revive a weak US economy.

However, President Obama, obviously, had queries about the Senate bill aimed at punishing its important trade partners. 

"My main concern ... is whatever tools we put in place, let's make sure that these are tools that can actually work, that they're consistent with our international treaties and obligations,'' Obama said.

"I don't want a situation where we're just passing laws that are symbolic knowing that they're probably not going to be upheld by the World Trade Organization (WTO),'' he said.

The US Senate Thursday cleared a procedural vote to advance the bill, known as the Currency Exchange Rate Oversight Reform Act of 2011, which sets in motion a process for imposing punitive tariffs on a country with allegedly misaligned currencies, noticeably the Chinese yuan.

Obama said that the yuan has appreciated to some extent over a period of time, though it has not met the expectation of the United States. 

Beijing has repeatedly expressed its strong opposition to the U.S. Senate move, warning that it "seriously violates rules of the World Trade Organization and obstructs China- US trade ties."

Even if the measure passed a floor vote in the Senate, it needs to get approval from the House, before it could reach President Obama for being signed into law.

House Speaker John Boehner voiced his suspicion about the bill on Tuesday.

"It's pretty dangerous to be moving legislation through the United States Congress forcing someone to deal with the value of their currency," Boehner said. "This is well beyond what Congress ought to be doing, and while I've got concerns about how the Chinese have dealt with their currency, I'm not sure this is the way to fix it."

Republican House Majority Leader Eric Cantor earlier warned an "escalation" in trade tensions could have painful "unintended consequences." He also said President Obama should use existing powers to deal with US-China currency issues.

Many U.S. economists believe that Senate legislation is not an appropriate measure to address the currency issue.

Leading U.S. media, including The Washington Post in an editorial, said that the Senate bill is "counterproductive" and will do more harm than good to the United States, according to a report by the Xinhua News Agency.

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