Thomas Eyes Legislation To Pressure China On Currency.

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Author: Vaughan, Martin

Trade

House Ways and Means Chairman Thomas said today Congress might take up legislation to pressure China to move toward de-linking its currency from the dollar, as a way to bolster diplomatic pressure the Bush administration has been putting on the Chinese. "It is going to be an ongoing concern, and we need to let China know â€" probably from a legislative position â€" that the administration's recent exhortations are supported by the Congress," Thomas said in a speech to the U.S. Chamber of Commerce. Asked by reporters to elaborate following the speech, Thomas did not cite specific legislation, saying only "there are a number of ways to resolve that." Senate leaders have promised Sens. Charles Schumer, D-N.Y., and Lindsey Graham, R-S.C., a summertime vote on their bill, which would use the threat of tariffs to force China to re-value the yuan. Likewise, a number of House Republicans have issued calls for the House to vote on some form of China bill this year. Thomas told the Chamber he was worried that even if China does take steps to float the yuan, it would not result in "that significant a change." Instead, Thomas said he would rather China make interest rate changes to ensure that its economy does not overheat.

Thomas said the Central America Free Trade Agreement is becoming an "all-purpose scapegoat for anyone's problems on China." He offered several other explanations for reluctance among some members to back CAFTA â€" including the fact that some are looking ahead to a possible vote on a global trade deal in the Doha round and will make that their affirmative vote on trade. Also, Thomas said redistricting in California and elsewhere created "safe" districts that make Democrats more wary of primary challengers and thus less willing to break ranks with labor unions. Still, Thomas said he believes the House will be able to vote on CAFTA before the July 4 recess.

In response to an audience question, Thomas said he would continue to look for a legislative vehicle to make the capital gains and dividend tax cut permanent this year, but noted that a temporary extension is an option if permanence is not possible. "The Senate has prepared in the budget reconciliation structure an opportunity to deal with this issue … I would look for in terms of a vehicle something that has a chance of getting 60 votes rather than 51," he said. Meanwhile, Rep. Mark Kirk, R-Ill., said in an interview that the China "Working Group" â€" which he recently organized with Rep. Rick Larsen, D-Wash., and 12 other members of both parties â€" is focused on a long-term diplomatic strategy toward China, not on the economic or military disputes of the moment. "There are various groups looking at the potential for a conflict with China. This group is designed specifically not to," Kirk said. A Monday release announcing the group's formation said it will organize monthly forums "about U.S.-China issues ranging from trade and economic policy to space exploration."

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By Martin Vaughan