Key China currency vote hits snag in Senate

Reuters News
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Posted: Oct 06, 2011 10:49 AM
Key China currency vote hits snag in Senate

By Doug Palmer

WASHINGTON (Reuters) - U.S. legislation designed to get China to revalue its currency hit a snag on Thursday as the Democratic leader of the Senate said wavering support from the Republicans could force lawmakers to drop the bill.

The bill calling for U.S. tariffs on imports from countries with deliberately undervalued currencies had gained support from many lawmakers alarmed at high unemployment ahead of 2012 elections. But it has drawn warnings from Beijing that it could trigger a trade war, and the White House voiced concern the measure might go against international trade rules.

Senate Majority Leader Harry Reid said he was worried that Republican support for the legislation could be wavering four days after a robust bi-partisan vote of 79-19 in favor of starting action on the bill.

"It's difficult for me to understand (how) people could be switching their votes from Monday to Thursday," said Reid as the legislative drive bogged down in a dispute over amendments to the Currency Exchange Rate Oversight Reform Act of 2011.

"The people who are opposing this legislation are probably doing business in China and they are afraid of offending the Chinese," said Senator Lindsey Graham, a Republican who is a co-sponsor of the legislation.

Reid said he still hoped the Senate would pass the bill before the weekend, but warned that work on the legislation would end if it fails to clear a "cloture" vote -- a key procedural step on Thursday morning.

"If cloture's not invoked, of course, that ends it, which would be a sad day, I think, in the relations between the United States and China, to think that we capitulated in something as important as this," Reid said.

Republicans were balking at cooperating with Reid because he rebuffed their effort to attach amendments to the currency legislation, including one containing President Barack Obama's jobs bill.

"We've offered to work with Republicans on several germane amendments. I stand by that offer," he said.

Many economists say China holds down the value of its yuan currency to give its exporters an edge in global markets. China says it is committed to gradual currency reform and notes that the yuan has risen 30 percent against the dollar since 2005.

(Writing by Paul Eckert; Editing by Andrea Ricci)