Second Senate panel readies China currency bill

A second U.S. Senate committee is nearing a vote on a bill aimed at giving the U.S. Treasury Department new tools to pressure China to raise the value of its currency, congressional aides said on Tuesday.

The Senate Banking Committee will meet on Wednesday morning to consider the legislation drafted by Chairman Chris Dodd, a Connecticut Democrat, and Sen. Richard Shelby of Alabama, the top Republican on the panel.

The committee vote is scheduled the same day as U.S. Treasury Secretary Henry Paulson will be meeting top Chinese officials in Beijing on the currency issue. Last week, the Senate Finance Committee voted 20-1 to give the U.S. government new tools to pressure countries with "fundamentally misaligned currencies."

Those include U.S. anti-dumping duties if countries refuse to reform their currency policies after being formally cited by the United States in a new semiannual report replacing an old one requiring the Treasury Department to identify countries that are manipulating their currency for a trade advantage.

The Banking and Finance committees have sparred recently over which panel has jurisdiction for currency legislation.

The Dodd-Shelby bill, as described by the senators last month, would make it harder for the Treasury Department to avoid labeling China a currency manipulator, rather than abandon that designation as the Finance Committee bill does.

Countries with a material global current account surplus and a significant bilateral trade surplus with the United States would be classified as "currency manipulators, without regard to intent," they said.

The bill also would require a number of Treasury Department actions once currency manipulation is found. Those include developing a plan of action within 30 days that sets benchmarks and time frames for the foreign trading partner to reform its currency practices.

It mandates U.S. action through the International Monetary Fund to pressure countries to end currency manipulation, and authorizes the Treasury Department to file a World Trade Organization case if "goals and benchmarks are not met within nine months."

The legislation also would create a process for Congress to formally voice its disapproval if Treasury fails to cite a country for currency manipulation.

Other provisions would hold Treasury's feet to the fire in terms of pressuring China to open its financial services markets to more U.S. companies.