Senators Push Treasury Secretary for Action on China Currency, IPR, Etc.
On June 10, 2010, the Senate Finance Committee held a hearing on “The U.S.-China Economic Relationship: A New Approach for a New China.” The only witness testifying at the hearing was Treasury Secretary Geithner. During this hearing, Committee members expressed dissatisfaction with the Administration’s progress on China and pressed the Treasury Secretary on issues such as currency, intellectual property rights protection, China’s protectionist indigenous innovation provisions, etc.
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Senators Voice Objections to Delay of Treasury Currency Report
During the course of the hearing, numerous Senators objected to the Administration’s decision to delay the issuance of Treasury’s biannual currency report. The Senators pressed the Treasury Secretary to state whether the Administration considers China a currency manipulator. Geithner declined to answer the question, stating that the question would be answered when the delayed currency report is issued.
(On April 3, 2010, the Treasury Department announced that it would delay publication of its report to Congress on the international economic and exchange rate policies of major U.S. trading partners (such as China) which was due on April 15, 2010, as there were a series of high-level meetings (such as G-20 meetings and the Strategic and Economic Dialogue with China) that that could advance U.S. interests. See ITT’s Online Archives or 04/05/10 news, 10040505, for BP summary on delay of the report. See ITT’s Online Archives or 05/26/10 news, 10052605, for BP summary of S&ED.)
Senator Schumer Intends to Soon Pursue China Currency Bill
During his questioning of the Treasury Secretary, Senator Schumer (D) stated that he plans to soon push forward with bipartisan currency manipulation legislation.
(On March 16, 2010, a bipartisan group of Senators introduced legislation (S. 3134) to penalize countries, such as China, that undervalue their currency to artificially discount the price of their foreign products. It is not known whether Senator Schumer will be pushing S.3134 or will introduce another bill. See ITT’s Online Archives or 03/17/10 news, 10031712, for BP summary of S. 3134.)
Legislation to Address China Government Procurement Possible
During the hearing, Senator Stabenow stated that she intends to move forward with legislation to address China’s government procurement policies. Such legislation could limit the waiver of Buy America provisions, etc. to purchase goods and services from China until China signs the WTO government procurement agreement.
Several Senators expressed skepticism that China would keep the promise it made at the recent SE&D to submit a revised offer to join the WTO Government Procurement Agreement, as China has made such promises before.
Ranking Member Discusses Reciprocal Action Against China
Ranking Member Senator Grassley warned that if China refuses to play by the same rules as everyone else, then the U.S. should reconsider the rules that it applies to China. As examples, Grassley notes that: (i) if China continues to refuse to make a serious offer to join the Government Procurement Agreement in the World Trade Organization, the U.S. should take a harder look at its own procurement rules as they apply to the procurement of goods and services from China; and (ii) if China chooses to apply a “national economic security” test when it reviews foreign investment through mergers and acquisitions, perhaps the U.S. should do the same with respect to Chinese investments in the U.S.