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Why China 'trade war' bill is tying House Republicans in knots

House Republicans are blocking a vote on a bill to punish China for currency manipulation. Leaders say it could unleash a trade war, but many rank and file want to take China to task.

The bill to punish China for manipulating its currency ? and allegedly stealing American jobs ? is setting off a clash within Republican ranks on Capitol Hill.

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The bill, which would impose tariffs on Chinese goods, has already passed the Senate with bipartisan support and would likely pass the House if brought to the floor. But so far, House Speaker John Boehner refused to do so.

With multinational corporations and conservative antitax groups ? key Republican constituencies ? opposed to the bill, Mr. Boehner has been loath to let it see the light of day, given that it could be vetoed by President Obama anyway.

But pressure on Boehner is mounting. Lawmakers representing states hardest hit by the rise of Chinese manufacturing want to go on the record supporting the bill, and GOP presidential hopeful Mitt Romney has taken a stand on China currency even more aggressive than the Senate bill.

Boehner has called the measure ?very dangerous.? His concern is that raising tariffs on Chinese goods could spark a damaging trade war at a time when the economy is ill-suited to absorb another blow.

?I have made my position pretty clear that I?ve got grave concerns about this bill,? he added at a briefing on Wednesday. For Congress to act now ?poses a very severe risk of a trade war and unintended consequences that could come as a result.?

Boehner is asking the president to stick his neck out and clarify whether he would veto the bill. ?It?s time for the president to lead,? he said.

China's manipulation of its currency has long angered Washington. But the current jobs crisis has given the issue added impetus. Backers of the bill say that, by keeping the value of its currency artificially low, China gives its goods as much as a 30 percent price edge in US markets and a comparable disadvantage for American goods in China. The Senate bill would authorize economic sanctions if a trading partner is found to be maintaining its currency at an artificially low level to gain a trade advantage.

China has already signaled its displeasure. It let the value of its currency sink for the second day in a row on Thursday ? a move analysts interpret as a rebuff of the Senate vote.

For their part, major US corporations are also worried.

?The American companies who have become invested in China don?t want change,? says Peter Morici, former chief economist at the US International Trade Commission and a professor at the University of Maryland.

Source: http://rss.csmonitor.com/~r/feeds/csm/~3/SN45CxG5Qnw/Why-China-trade-war-bill-is-tying-House-Republicans-in-knots

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