Senate Passes China Currency Legislation Bill 63-35
So while the US is setting the stage for a possible retaliation against Iranians hiring Mexicans to kill for them, because they obviously can't do it on their own, the US Senate has just passed the China currency legislation bill in a 63 to 35 vote, which in turn will do miracles for Sino-US foreign relations. According to the legislation, it would let companies seek duties to compensate for a weak Chinese yuan. However, as Goldman indicated first thing this morning, the probability of this bill actually being enacted in its current form, or any, is slim to nil: while the Bill is under review by Obama administration, John Boehner, has called it "dangerous." If only he had an idea... Full Goldman take can be found here.
From The Hill:
The Senate approved legislation that could lead to higher tariffs on Chinese imports in a 63-35 vote, with several Republicans voting with Democrats.
The vote poses an immediate quandary for House Republican leaders, who have so far dismissed the bill as a recipe for starting a trade war between the U.S. and China, just when the world is looking for the countries to work together to help maintain global economic growth.
It is also a headache for President Obama, who is cool to a bill that will complicate his administration’s work with China on an array of issues. Obama has also suggested that the bill, if passed, could run foul of international trade rules and lead to retaliatory tariffs on U.S. exports, hurting the businesses and workers the legislation is designed to protect.
The bill would require the U.S. to determine which countries' currencies are misaligned, and impose compensating duties on imports from those countries if this misalignment is not corrected. While not specifically aimed at China, the bill is seen as an answer to what most agree is an undervalued Chinese currency that makes it harder for U.S. companies to compete against relatively less expensive Chinese goods.
Naturally the Alliance for American Manufacturing was ecstatic by this development:
This evening, the U.S. Senate passed S.1619, the Currency Exchange Rate Oversight Act of 2011, a bill to address China’s ongoing currency manipulation, by a vote of 63-35.
Said Alliance for American Manufacturing (AAM) Executive Director Scott Paul:
"The Senate's vote is a win for American jobs. A strong bipartisan majority has said to China: Stop the cheating on currency or face consequences. And more importantly, American manufacturers and their workers know that the Senate will guarantee a level playing field on currency so that we can export and successfully compete in the global marketplace.
"If S.1619 is signed into law, it will create good American jobs. But there is a long way to go. Speaker Boehner and President Obama appear to have concerns about this legislation. Most trade lawyers who have reviewed the legislation believe it is in compliance with our international trade obligations. The chances of a 'trade war' with China are about as likely as seeing a unicorn on the Capitol lawn.
"The choice is now clear for Speaker Boehner and President Obama: Will you side with the Beijing regime and outsourcers, or will you stand with American manufacturing? I find it hard to believe that Speaker Boehner would defy a majority of his own caucus and the House of Representatives to placate irrational threats from a communist government. I doubt President Obama wants to be outflanked on China by Mitt Romney or any other presidential candidate after criticizing President Bush on China trade in 2008.
"The passage of the currency bill in the Senate is also a major defeat for special interests. 16 Republican Senators defied the Club for Growth and voted with the strong majority of their constituents for this bill.
"We praise the leadership of Senators Sherrod Brown, Lindsey Graham, Chuck Schumer, and Jeff Sessions for authoring and securing passage of S.1619. We also thank Majority Leader Harry Reid for bringing the legislation to the floor and the 63 Senators who supported passage of S.1619 tonight."
We wonder what the AAM will think of this historic victory when that can of Folgers coffee at Wal Mart jumps by 100% in a few months, or when the government has to actually pay a real interest rate for those 10 Year bonds...