Invoking Section 301 of the 1974 Trade Act, a group of 42 US representatives, 22 Democrats and 20 Republicans, had petitioned the US Trade Representative (USTR) to initiate an investigation about China's currency manipulations. Late last week this petition was rejected by the USTR.
This was the fourth petition filed under Section 301 against China to be rejected by the Bush Administration. Three petitions were filed by Members of Congress and one by a coalition of business and labor groups.
This is another setback for any unilateral trade action against China. Earlier last week, the Treasury Department did not designate China a "currency manipulator" in its bi-annual report. It is now expected that members of the US Congress will actively push forward legislation against China. A case in point is a bipartisan bill that was introduced by the leaders of the Senate Finance Committee, calling for a 27 percent penalty on all Chinese goods to offset the undervalued Chinese currency. This legislation was put on "fast track" and a vote could come as early as September. The mood in the US Congress is pretty much against China, but President Bush will have the right to veto this bill and his stance has been very much in China's favor so far.