UPDATE 2-US lawmakers eyes late-year Senate vote on China yuan

Published 09/28/2010, 05:29 PM

* Schumer: "This issue cannot wait for another year"

* House to vote on its bill Wednesday

* Hoyer says House bill meets WTO standards

(Adds quotes from Senator Schumer)

By Doug Palmer

WASHINGTON, Sept 28 (Reuters) - The U.S. Senate will wait until after the Nov. 2 congressional elections to vote on legislation to pressure China to raise the value of its currency, Democratic senators said on Tuesday.

Senator Sherrod Brown told reporters he saw strong bipartisan support for currency legislation that the House of Representatives is expected to approve on Wednesday.

However, it is unlikely the Senate will vote on such a bill before lawmakers recess in coming days to go home to campaign, the Ohio Democrat said.

Later, Senator Charles Schumer, a New York Democrat who helped craft the Senate's bill, said he would push for a vote on a China currency bill when lawmakers return in November.

Many members of Congress believe China deliberately undervalues its currency by as much as 25 percent to 40 percent to give its companies an unfair price advantage.

The House version of the bill deals with that issue by directing the Commerce Department to treat undervalued currencies as an export subsidy.

That opens the door for U.S. companies to seek countervailing duties to offset China's currency advantage. However, companies must prove they have been injured, or are threatened with serious injury, by competing imports from China to win the relief.

"I think a majority of senators, including some number of Republicans, understand that China is gaming the currency system and that causes an imbalance trade that we need to fix," Brown, a Senate Banking Committee member, told reporters.

The House bill, unlike many other pieces of legislation, is a "short, readable bill" that is easy to comprehend, Brown said. He said he thought President Barack Obama would "think twice" about vetoing the legislation if it reached his desk.

Obama and his advisers understand the United States will never be able to deal with its $20 billion-a-month trade deficit with China without addressing the currency issue, Brown said after a speech on how to revitalize U.S. manufacturing.

House Democratic leader Steny Hoyer told the same audience lawmakers had worked with the Obama administration to ensure the currency bill was consistent with World Trade Organization rules.

"We worked to make sure -- the administration and I and others wanted to make sure -- ... that it is WTO compliant," Hoyer said. "It is not an issue of closing our borders. It is an issue of making the playing field level and fair.

"By illegally keeping the value of its currency low, China is able to sell its goods in the United States at an artificially low price, which helps put American manufacturers out of work."

The House will vote on its version of the bill on Wednesday, Hoyer told reporters.

If the House and Senate pass different bills, member would have to confer to reach a compromise bill.

A spokeswoman for the U.S. Trade Representative's office declined to say whether the Obama administration thought the bill was consistent with WTO rules.

"We do not typically comment publicly on the WTO-consistency of pending legislation," she said.

Schumer praised the House for pushing ahead on its legislation, but said provisions of the bipartisan Senate bill would give the White House additional tools to pressure China on the currency issue.

"This issue cannot wait for another year or for a new Congress," he said. "I am confident that this bill will pass the Senate with overwhelming support."

(Reporting by Doug Palmer; editing by Mohammad Zargham and Bill Trott)

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