"On April 20, we received another petition under Section 301 of the Trade Act of 1974 on the issue of China's currency.
"In most respects, this petition is the same as two petitions filed in September 2004 by labor unions, other interests and certain members of Congress.
"The Bush Administration has been consistent in its position with respect to China’s exchange rate policies: we believe China must move to adopt a flexible, market-based exchange rate. Under the leadership of Treasury Secretary Snow and his team, the Administration has worked tirelessly to urge the Chinese government to implement that goal. In response, Chinese officials have publicly committed that they will move to a more flexible system. We believe they have also undertaken the necessary and appropriate steps to prepare for such a move.
"Secretary Snow has made clear that China is now ready to move toward a flexible, market-based exchange rate and should move without delay in a manner and magnitude that is sufficiently reflective of underlying market conditions. In reporting to Congress on international economic and exchange rate policies on May 17, Secretary Snow remarked that China’s current exchange rate system poses risks to China's economy, its trading partners, and global economic growth. He also noted the growing international consensus on the importance of flexible currency regimes.
"The Administration is committed to using all available tools to ensure a level playing field in international trade, including important trade remedy laws like Section 301. The Administration also shares the goal of many of the proponents of the April 20 Section 301 petition: a flexible, market-based exchange rate system in China. However, we do not believe that a Section 301 action is an appropriate or a productive way to achieve that goal. We therefore must decline to accept the course of action recommended through this latest petition.
"The Administration clearly recognizes the importance of the currency issue in the overall context of the U.S.-China economic relationship, but it is not the only issue of concern. Shortly after being sworn in as U.S. Trade Representative, Ambassador Portman initiated a top-to-bottom review of U.S. trade policy with respect to China. This review aims to ensure that the United States is employing the best strategies and most effectively utilizing the range of tools and resources at our disposal to pursue a trade relationship with China that best serves the American people.
"Ambassador Portman has already met with a range of Chinese officials to press U.S. economic interests including China’s enforcement of U.S. intellectual property rights; market access for U.S. goods and services, including manufactured and agricultural exports; concerns over unfair Chinese trading practices that disadvantage U.S. firms and their workers; and other issues.
"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."