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Administration Declines Section 301 Petition on China's Currency Policies

 

 

WASHINGTON, DC – U.S. Trade Representative Susan C. Schwab today issued the following statement regarding a petition requesting that the United States initiate World Trade Organization dispute settlement procedures against China over that country’s currency exchange rate policies:

“The Bush Administration has been consistent in its position with respect to China’s exchange rate policies.  We believe that China must move to adopt a flexible, market-based exchange rate.  The Department of the Treasury, which leads the U.S. government’s dialogues on currency issues, continues to work assiduously to encourage Chinese action to this end, including in the Strategic Economic Dialogue, which met in Washington on May 22 and 23.   

“As noted by the Treasury Department in the Report to Congress on International Economic and Exchange Rate Policies issued today, ‘While China has taken some steps to increase the flexibility of the renminbi, the pace of appreciation that the authorities have allowed is much too slow and should be quickened.’

“The Administration is committed to using all available tools to ensure a level playing field in international trade, including bringing WTO cases where we believe such cases promise to be the most effective course of action.  This commitment has clearly been demonstrated in action.  Indeed, in the past 15 months, the Administration has brought four WTO cases against China (challenging China’s IPR enforcement regime; China’s denial of market access to U.S. copyright-intensive industries; China’s use of prohibited subsidies; and China’s discriminatory treatment of imported auto parts).

“I applaud Secretary Paulson’s strong leadership in promoting high-level U.S.-China discussions on economic issues, and on exchange rate issues generally.  We do not believe that this Section 301 petition is likely to be the most productive way to secure Chinese movement towards currency flexibility.  Rather, the Administration continues to believe that firm engagement with China, in concert with international institutions and other countries, offers the best chance of success.  We therefore decline to accept this petition.

“The Administration will continue to work with Members of Congress on these issues as we seek to achieve our common goals: a more flexible, market-based exchange rate for China's currency and a level playing field for American businesses, workers, farmers and service providers.”

Background:

On May 17, the Office of the U.S. Trade Representative received a petition under Section 301 of the Trade Act of 1974 on the issue of China's currency, seeking the invocation of WTO dispute settlement against China and alleging that China’s exchange rate policies are inconsistent with IMF rules.    

In most respects, this petition is substantively the same as the two petitions filed in September 2004 and April 2005.