U.S. senators press for vote on China currency bill

An employee counts yuan banknotes at a Bank of China branch in Changzhi, Shanxi province January 13, 2010.

WASHINGTON (Reuters) - Two U.S. senators on Monday called for a vote on a bill to get tough with China over its currency practices, while a U.S. business coalition warned the legislation would backfire on the United States.

"We are writing to ask that a Senate vote be scheduled on the Currency Reform for Fair Trade Act," Senator Sherrod Brown, an Ohio Democrat, and Senator Olympia Snowe, a Maine Republican, said in a letter to party leaders in the chamber.

The action signaled that supporters intended to keep fighting for final approval of the bill, which was passed by the House of Representatives in September and is strong backed by U.S. labor groups, steel companies and manufacturers who compete against lower-priced imports from China.

U.S. lawmakers returned on Monday from a holiday break and are expected to work for a few weeks before adjourning for the year. House bills that have not been approved by the Senate at that time would die when a new Congress is seated in January.

The currency bill directs the U.S. Commerce Department to consider currency undervaluation a subsidy under U.S. trade law, allowing companies to win larger countervailing duties on imports deemed by U.S. authorities to be unfairly priced.

"Repeated efforts by the administration to address Chinese government currency manipulation through diplomacy have yielded no meaningful results. The American people are demanding legislation to stop our trading partners from rigging the game to undercut true market competition," Brown and Snowe said.

Supporters complain that China undervalues its currency by 15 percent to 40 percent, giving its companies an unfair price advantage in international trade.

A spokesman for Senate Majority Leader Harry Reid said there had been no decision on whether to schedule a vote on the House bill. The cooperation of both Republicans and Democrats would be required to get the legislation to President Barack Obama's desk for signing.

A coalition of 40 business and farm groups, including the U.S.-China Business Council, the American Soybean Association and the U.S. Chamber of Commerce, warned China could retaliate against U.S. exports if the bill became law.

They urged Congress to work with the Obama administration on other ways to pressure China to revalue its currency and make various market-opening trade reforms.

"We share Congress' desire to have China act more quickly to adopt a market-determined exchange rate. But the proposed unilateral measure is not going to achieve that result," the groups said in their own letter to Senate leaders.

(Reporting by Doug Palmer; editing by Paul Simao)