Business groups express opposition to China currency legislation

By Vicki Needham - 09/21/11 01:14 PM ET

Legislation that would pressure China to accelerate the value of its currency would likely have the opposite effect and result in a retaliation against U.S. exports, a coalition of business groups said Wednesday.

Spearheaded by the U.S.-China Business Council, 51 trade associations with broad interests sent a letter to Senate leaders as well as each Senate office asking lawmakers to halt efforts to pass a measure.

“We urge you to oppose currency legislation and instead work with and vigorously call on the Administration to develop a robust bilateral and multilateral approach to achieve tangible results, not only on China’s exchange-rate policies, but also on other Chinese policies that are harming American economic interests,” the letter states.

The groups argue that while China needs a yuan exchange rate that responds to trade flows, the Communist nation should "move steadily" toward a market-determined exchange rate.

“Unilateral legislation on this issue would be counterproductive not only to the goals related to China’s exchange rate that we all share, but also to our nation’s broader objectives of addressing the many and growing challenges that we face in China,” the letter said.

The letter got six more signees than during a June effort, according to a release from the U.S.-China Business Council.

The groups also expressed concern that legislation would increase tariffs on imports from China and "is unlikely to create any incentive for China to move expeditiously to modify its exchange policies," the letter said.

"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."

Senate Majority Leader Harry Reid (D-Nev.) said last week that he'd like to move a currency bill this fall, an idea that has garnered support from several Democratic senators, House Minority Leader Nancy Pelosi (D-Calif.) along with organized labor, which has argued the would add jobs by helping the U.S. manufacturing sector.

Pelosi has said that a currency bill should be considered and passed along with three pending free-trade agreements with Colombia, South Korea and Panama.

Sen. Sherrod Brown (D-Ohio), a staunch supporter of the legislation, has said he plans to a offer a China currency amendment to a trade preferences bill that is under consideration in the Senate this week.

The groups signing the letter include, the American Chambers of Commerce in China, Shanghai, South China and Southwest China as well as the American Soybean Association, Business Roundtable, Distilled Spirits Council of the United States, National Foreign Trade Council, Telecommunications Industry Association, and the U.S. Chamber of Commerce.