US senate delays vote on China currency bill
(Reuters)
Updated: 2005-11-17 07:02

The chief sponsors of a US Senate bill threatening China with a 27.5 percent tariff on its exports to the United States said on Wednesday they would delay a promised vote on the bill until March 31 at the latest.

Sen. Charles Schumer, a New York Democrat, said he and Sen. Lindsey Graham, a South Carolina Republican, were hopeful that President George W. Bush's visit to China later this week would prompt China to take positive steps to revalue its currency.

"Sen. Graham and I do not think it would be appropriate to vote on this bill while the president is there, so we have agreed to delay the vote," Schumer said.

The two senators are authors of a bill threatening China with a 27.5 percent tariff on its exports to the United States if it does not significantly raise the value of its currency.

The legislation is driven by frustration with the US trade deficit with China, which hit a record $162 billion in 2004 and is expected to exceed $200 billion this year.

"We hope and pray that the Chinese will move. We don't want to dictate anything to the Chinese. We don't want to tell them how quickly they should move or to what degree, but we do need to see some more movement on something that just about everyone agrees ought to happen," Schumer said.

Schumer and Graham unexpectedly won a procedural vote 67-33 on their bill early this year.

They agreed in June to put off a promised vote on the bill after a meeting with U.S. Treasury Secretary John Snow and Federal Reserve Chairman Alan Greenspan convinced them China was about to act on currency reform.

As part of the deal, Senate leaders promised the two senators another vote opportunity by the end of 2005.

In July, China ended a policy of pegging the yuan at 8.28 to the dollar, revaluing it by 2.1 percent and moving to a managed float with reference to a basket of currencies. It has since risen only slightly, frustrating many U.S. lawmakers who expected more from the July action.

In a speech in Kyoto, Japan, on Wednesday, Bush urged China to liberalize its currency, open its domestic market to US exports and create a "level playing field" for trade.

However, the Bush administration has opposed the Schumer-Graham bill. Snow and Greenspan again met with the senators this month on the legislation.

The new agreement allows the senators to have a vote on its bill when Congress returns in December from the U.S. Thanksgiving holiday break.

The two senators can also decide to delay a vote until "no later than March 31, 2006, if we determine that China is making additional progress on the currency issue," Schumer said.

Graham said he was "guardedly optimistic" that Bush's visit to China would prompt further action on the yuan.

How Beijing handles the currency issue will be a "defining moment" in U.S.-China relations, Graham said.