Warns Again Against US Currency Bill
by Mary Swire, Tax-News.com, Hong Kong
20 October 2011
In a press conference, whilst also warning that current global uncertainties could seriously affect China’s foreign trade in the final quarter of this year, and early in the next, the Ministry of Commerce’s spokesman Shen Danyang confirmed that the Chinese government would definitely respond, if the United States anti-renminbi currency bill came into force.
While not mentioning the RMB by name, the Currency Exchange Rate Oversight Reform Act would, after an analysis of those currencies adjudged to be “fundamentally misaligned”, allow countervailing import duties to be imposed as an offset to the calculated amount of currency undervaluation. Countervailing duties would be available to any US industry that could demonstrate that it has been injured by imports from the country with the undervalued currency.
The US Senate passed the currency bill earlier this month, and it should now proceed for consideration by the House of Representatives. However, it is still doubtful if it will be ultimately approved, as business groups, Republican leaders and President Obama have expressed a wariness that unilateral action by the US could lead to disputes with China at the World Trade Organization and retaliation against US exports to China.