Thursday, 6 October 2011

US Senate delays vote on currency bill amid differences

US President Barack Obama President Obama has said that any action by the US has to be consistent with international treaties
The US senate has postponed its vote on the much-debated currency bill until next week amid differences between the Republicans and Democrats.
The bill would make it easier to impose penalties on goods from countries seen as keeping their currencies artificially low.
Politicians and some business groups have accused China of using its policy of limiting the yuan's value to boost exports.
Leaders differed on certain amendments.
"I think China needs to carefully think about and process the substance of what people are saying here on the floor of the United States Senate." said John Kerry, chairman of the Democratic Senate Foreign Relations Committee.
'Very aggressive' The debate on China's currency policy has become the centre of attention amid a slowdown in the US economy.
Barack Obama US President
President Barack Obama said "China has been very aggressive in gaming the trading system to its advantage and to the disadvantage of other countries, particularly the United States."
"It is indisputable that they [China] intervene heavily in the currency markets and that the RMB [yuan], their currency, is lower than it probably would be if they weren't making all those purchases in the currency markets."
Politicians and policy makers have said that undervalued yuan has not only given an unfair advantage to Chinese exporters an unfair advantage, it has also contributed to the unemployment situation in the US.
"We cannot continue to let China flaunt the rules," said Democratic Senator Chuck Schumer.
Mr Schumer added that if not action was taken against China's policies the US "may never recover as a country. This is serious stuff".
Cautious approach However, President Obama warned that the US needed to take a cautious approach while handling the matter.
"My main concern and I've expressed this to Senator Schumer, is whatever tools we put in place, let's make sure that these are tools that can actually work, that they're consistent with our international treaties and obligations." he said.
President Obama's comments come as China has accused the US of using the currency dispute to take protectionist measures.
At the same time, some politicians and trade groups have said that such a bill may do more harm than good to the US economy.
They have warned that any such action by the US may start a trade war with China.
"Unilateral action by the United States will only serve to increase trade tensions and negatively impact the US economic recovery during this fragile period in the global economy," Bruce Josten of the US Chamber of Commerce wrote to the Senators earlier this week.

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