WASHINGTON (Reuters) - U.S. lawmakers on Tuesday unveiled bipartisan legislation to stop trading partners from manipulating exchange rates, and a senior Democrat vowed to keep pushing for rules against currency cheating in trade deals.
The bill would make deliberate weakening of currencies, which makes a country's exports cheaper, equivalent to an export subsidy under U.S. trade law, meaning it could be offset by import duties.
The top Democrat on the House Committee on Ways and Means, which has jurisdiction over trade, said the bill complemented a push to include rules against currency manipulation in a trade deal the United States is negotiating with 11 trading partners, including Japan. Negotiators hope to wrap up the Trans-Pacific Partnership within months.
"The importance of raising this in the legislation and within TPP is to put currency manipulation into the mix of trade negotiations and trade discussions," Representative Sander Levin, a Michigan Democrat, told reporters on a call to explain the legislation.
Fred Bergsten, former U.S. Treasury assistant secretary for international affairs, said the bill would probably not have a huge effect on trade flows, but it was important to send a signal that currency manipulation would not be tolerated.
"Currency manipulation is the number one protectionist issue of the 21st century," he said.
Bergsten and colleagues at the Peterson Institute for International Economics say trading partners' currency manipulations have driven up the U.S. current account deficit by $200 billion to $500 billion per year, leading to the loss of 1 million to 5 million jobs.
The new bill is a streamlined version of previous legislation that passed the House and Senate in separate years. It stops short of setting a new test for the U.S. Treasury to determine currency manipulators, as previous legislation did.
The House of Representatives bill is also supported by Democrat Tim Ryan and Republicans Tim Murphy and Mo Brooks.
In the Senate, Democrats Sherrod Brown, Debbie Stabenow and Charles Schumer and Republicans Jeff Sessions and Lindsey Graham will introduce the bill.
The Obama administration has said it is wary of attaching currency provisions to trade agreements.
(Reporting by Krista Hughes; Editing by Lisa Von Ahn)