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UPDATE 2-US to review if China yuan actions violate WTO-Kirk

Published 03/12/2009, 05:25 PM

* Bush administration dismissed calls for WTO case

* Treasury Department report due in mid-April

* China, Brazil, India moves said needed in Doha round (Adds more detail from questions, background)

By Doug Palmer

WASHINGTON, March 12 (Reuters) - The United States will examine whether China's currency practices are consistent with Beijing's obligations under the World Trade Organization, U.S. Trade Representative-designee Ron Kirk said on Thursday.

In written responses to the Senate Finance Committee, Kirk declined to say whether China is "manipulating" its renminbi currency, also known as the yuan, as President Barack Obama had said during last year's campaign.

But he said the Obama administration would "develop a comprehensive and integrated policy to address the full range of China's trade policies that impact the United States."

"As part of this comprehensive effort, of course, we will need to review China's actions for consistency with its WTO obligations," Kirk said in response to questions from a number of senators about China's exchange rate practices.

The administration of former President George W. Bush repeatedly said it believed challenging Beijing's currency practices at the WTO was the wrong approach to the issue. It rejected a number of petitions filed by House lawmakers and outside groups to look into the matter.

China's currency has risen about 20 percent against the U.S. dollar since mid-2005. But many U.S. lawmakers believe it remains significantly undervalued, giving Chinese companies an unfair price advantage in international trade.

China's exports plunged in January and February, prompting concern Beijing could devalue its currency to boost exports in the face of the global economic downturn.

U.S. Treasury Secretary Timothy Geithner angered Beijing earlier this year when he repeated Obama's campaign statement that China was manipulating its currency, prompting the White House to say no determination had been made yet.

The Obama administration will put its first official stamp on the issue in a semi-annual Treasury Department currency report due in mid-April.

US-EU AIRPLANE SPAT, DOHA ROUND

The Finance Committee released Kirk's responses shortly after voting to support his nomination to be U.S. trade representative. That sets the stage for the full Senate to vote, the final step in the confirmation process.

Senators pressed Kirk on a number of other China trade issues, such as concern Beijing is shunning well-established international product standards in favor of creating new standards to give its own firms an advantage.

Kirk said the United States was considering "appropriate next steps" to stop the Chinese People's Liberation Army medical library from allowing online sales of pirated copies of U.S. scientific and medical journal articles.

China's export restrictions on a number of raw materials are also a serious concern, he said.

But Kirk confirmed the United States intended to continue investment treaty talks with China, as well as India and Vietnam, even as other trade initiatives left over from the Bush administration remain under review.

Turning to another part of the world, Kirk said a WTO case brought by the Bush administration against European government support for Airbus remained a top U.S. government priority.

He promised to press Europe not to provide any additional subsidies for the civilian aircraft manufacturer.

Finishing the long-running Doha round of world trade talks is still a priority for the United States, but a breakthrough in those talks depends to a large part on what steps major developing countries are willing to take, Kirk said.

"Much of the current deadlock in the Doha negotiations can be traced to the continuing question of whether key emerging countries such as China, Brazil and India will make new market-opening commitments," Kirk said.

(Reporting by Doug Palmer; Editing by Sandra Maler and Philip Barbara)

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