Lobbyists Spar Over Currency Dispute
As a handful of Members work behind the scenes to jump-start stalled legislation to combat undervalued foreign currency, lobbying groups on both sides of the issue have mobilized, taking their message to the campaign trail and working to exploit a rift between two Senate committees.
In the Senate, both the Finance and Banking, Housing and Urban Affairs committees have crafted legislation aimed at dealing with currency manipulation.
Big corporations and business associations, which benefit from a weaker yuan, have capitalized on that split to help stymie the legislation.
Meanwhile, unions and smaller domestic manufacturers, which claim that China’s artificially weak currency puts them at a competitive disadvantage, all have stepped up their message that Congress needs to act.
“The fact that both committees pushed a version of this bill shows how pressing an issue this is,” said Sen. Charles Schumer (D-N.Y.), a chief sponsor of a currency bill with Sen. Lindsey Graham (R-S.C.). “Getting the Chinese to play by the rules and let their currency appreciate is the most important thing we can do to stop the flow out of jobs out of our country.”
Schumer added that both committees have “good ideas” and said, “I’m certain we can work out the differences in one final bipartisan bill.”
Bob Baugh, executive director of the Industrial Union Council and a founder of the Chinese Currency Coalition, said his organizations have been actively lobbying for currency legislation for three years.
With no luck so far on getting a bill passed, the unions have moved the epicenter of their lobbying from the Capitol complex to the campaign trail.
“We’re going back to the field,” Baugh said. “We are pressing people who are going to be running for office, not just the presidential campaigns, but every level.”
Baugh said that two weeks ago he was invited to a meeting at the City Club with a small collection of visiting Chinese dignitaries, who had already met with business lobbyists.
“They said these lobbyists told them that this won’t be a problem,” Baugh said. “There are people who would like to pretend this issue has gone away. I said to them, ‘I’m going to be very candid with you. We’re going to make this an issue. Believe me, this is an issue, in our polling, and we are demanding it of people who are running for office.’”
Senate and K Street sources say the Finance Committee version is a bolder revamp of the 1988 currency law that essentially rewrites the metric for declaring that a country is improperly manipulating its currency.
The Finance bill also attaches penalties, or trade remedies, to punish countries that the Treasury Department determines have run afoul of the currency law.
“The trouble it has run up against, the Banking Committee has been miffed over the fact that the Finance Committee took up the first half of the bill, which is changing the currency law,” explained one Senate aide. “So it embarked on its own effort to change the currency law. In the eyes of the labor union folks, it doesn’t go far enough.”
Senate sources say Senate Majority Leader Harry Reid (D-Nev.) has said he will bring currency legislation to the floor when the Banking and Finance committees come to an agreement on their differences. “That has not happened yet,” said the Senate aide.
The outreach effort between the two committees so far has been limited to the staff level, a source added. Outreach at the Member level “may yet happen,” the source said.
But a Baucus aide said the Finance Committee chairman “is still working with Chairman [Chris] Dodd [D-Conn.]. We hope to have a product for the Senate to vote on this year.”
A Banking Committee aide said there is no turf battle. “The currency elements of the bill fall under Banking’s jurisdiction, and the trade elements of the bill are under Finance’s,” the aide said. “We’re continuing conversations with both the Finance Committee and leadership on the best way to move forward.”
Currency legislation remains paralyzed in the House side, too, with disagreement in part over what should be done to penalize countries.
Alan Tonelson, a research fellow at the U.S. Business and Industry Council, which represents domestic manufacturers, said the value of China’s yuan, which makes Chinese products relatively inexpensive, puts his sector at a sharp disadvantage. He said that Congressional Democrats are not doing enough to curb the China currency problem and that Democrats are “acting like they’re part of the problem” instead of a solution.
USBIC supports a currency bill in the House known as the Hunter-Ryan Chinese Currency Act after sponsors Reps. Tim Ryan (D-Ohio) and Duncan Hunter (R-Calif.).
In the Senate, he said, “You’ve got a Finance- Banking turf struggle. This turf battle is somewhat revealing in that it shows that each of these two chairmen seems to be more interested with advancing his own institutional prerogative than helping U.S. manufacturers.”
But Tonelson blasted both the Dodd and Baucus measures as relatively “weak fish,” and said his group supports measures like the Ryan-Hunter bill.
Tonelson said any currency legislation must include countervailing duties as punitive measures. “That’s the only real chance domestic manufacturers have,” he said.
On the other side, Cal Cohen, president of the Emergency Committee for American Trade, said this is no time to move on currency legislation.
“I would have to say that given the current instability in financial markets, given that there is so much uncertainty, the recommendation that we are making right now to the Congress is that they not go forward with major legislation on currency,” Cohen said.
“We’ve been sending that message to the leadership in the House and in the Senate,” he added. “We are very much aware that they have been thinking about taking action.”
Erin Ennis, vice president of the U.S.- China Business Council, which includes more than 250 U.S. companies such as Microsoft, Boeing and General Electric, works closely with business associations including the Business Roundtable, the U.S. Chamber of Commerce, ECAT, National Foreign Trade Council as well as industry-specific trade groups like Retail Industry Leaders Association.
Ennis downplayed the Senate turf battle as standing in the way of movement on currency and, instead, said it was a matter of policy.
“We have concerns about taking action against currency across the board,” she said. “We don’t really know what it would do to the U.S. economy, at a time when we’re trying to make sure we are on sure economic footing.”
Ennis said that despite what unions and domestic manufacturers claim, U.S. trade with China is a two-way relationship, with China as this country’s third-largest export market. Next week, USCBC will release a new report showing exports to China by Congressional district. “Not every district fares well,” she said, “but most of them do.”
She added that China is moving on its currency and has addressed many U.S. concerns already.
But Baugh of the Industrial Union Council said that Cohen and Ennis and their allies will come up with any argument to oppose currency legislation. Right now, Baugh said, their argument is that the economy is too fragile, but when the economy was on better ground they argued that such legislation would run counter to free-trade principles.
“We’re saying if we don’t move, it will hurt our economy,” he said.