By Andrew Stiles - 08/06/10 10:00 AM EDT
Democrats are planning a legislative push on China this fall as they work to promote their support for U.S. manufacturers ahead of the midterm elections.
Legislation targeting China’s currency is at the forefront of the effort. Lawmakers in both parties argue China keeps its currency artificially low to keep the price of its exports down, which hurts U.S. manufacturers and workers.
One reason is pressure from the administration. White House Chief of Staff Rahm Emanuel has asked Sen. Charles Schumer (D-N.Y.), the most outspoken critic of China’s currency policy, to hold off on his legislation.
The administration worries a successful vote on China currency legislation would be a setback to U.S.-China relations.
Sen. Sherrod Brown (D-Ohio) on Wednesday joined Schumer and nine other senators from both parties in sending a letter to President Obama urging the administration to do more to combat China’s unfair trade practices.
“We are gravely concerned by the administration’s failure to address China’s currency practices and other predatory actions,” the letter stated.
Schumer has said that forcing China to revalue its currency is “the single biggest step we could take to protect American jobs.”
Some supporters of Schumer’s bill believe it will be taken up when the Senate returns this fall, partly because the move could be good politics for Democrats.
As part of their “Make It in American” initiative, House Democrats have passed a number of bills designed to promote domestic manufacturing and plan
another push when they return from recess. President Obama touted the approach in a visit to Detroit last week.
Currency plays right into that argument, and polls show U.S. voters are concerned about how competition from China is affecting U.S. jobs. Unemployment is expected to rise on Friday with the monthly jobless report.
A recent poll by the Alliance for American Manufacturing (AAM) found that Americans are worried about China when it comes to jobs, with 87 percent of Americans favoring a “national manufacturing strategy” to keep U.S. jobs from being shipped overseas.
“The people get it; voters want congressmen and senators to do something on China,” said Steve Capozzola, a spokesman for AAM.
“I think it’s pretty clear that incumbents in both parties need a China vote before they go home,” said Lloyed Wood, spokesman for the American Manufacturing Trade Action Coalition.
The House is also taking steps to address China.
Rep. Brad Sherman (D-Calif.) on Wednesday introduced legislation that would revoke China’s Most Favored Nation trade status until Obama established a “more level playing field between our two nations.”
“The U.S.-China trade relationship is horrendously lopsided,” Sherman said in a statement.
Rep. Sandy Levin (D-Mich.), chairman of the House Ways and Means Committee, announced a hearing in September to assess Chinese currency policy and determine whether congressional action is needed.
Wood said the September hearing “augurs well” for possible action on China currency.
“We’re certainly closer to a vote today than we were at any time in the previous Congress,” he said.
“If you can’t vote on currency, it shows that Congress is not as serious as it should be in tackling the jobs issue,” Wood added.
Tensions between the executive and legislative branches over how to deal with China have persisted through changing control of the White House and Congress.
Schumer and Sen. Lindsey Graham (R-S.C.) introduced China currency legislation in 2005 that won 67 votes in the Senate but was never taken up in the House. The two did not pursue the bill further after the positive vote to give China time with the issue.
Some think legislation is needed to strengthen the administration’s hand in negotiations with China, while others view the tough talk in Congress as little more than posturing.
“Diplomacy without leverage is not going to work — that’s why it is incumbent on Congress to act,” Wood said.
Jerome A. Cohen, a New York University Law professor and co-director of the U.S.-Asia Law Institute, said the administration couldn’t afford to press China too hard on currency.
“Obama’s situation is he doesn’t want to needlessly offend China. He’d like to use Sen. Schumer and others’ vigorous protests and threats as a way to coerce China peacefully and in friendly fashion,” Cohen said.
Sen. John Cornyn (R-Texas) said every administration frowns upon Congress inserting itself in areas of diplomatic and foreign policy, but should never ignore Congress completely on these issues.
“Congress has an important role to play too, so I hope they will try to work out something rather than just say, ‘Stay out of our sandbox,’ ” Cornyn said.