On China, Obama Says US Must Address Currency Rates

On China, Obama Says US Must Address Currency Rates
February 3, 2010 · Posted in NEWS

Wed Feb 3, 2010 10:43am EST President Barack Obama said on Wednesday China and Asia would be a huge market for U.S. exports going forward but it would be important to address currency rates to ensure American goods were not facing a disadvantage.

WASHINGTON, Feb 3 (Reuters) -

“One of the challenges that we’ve got to address internationally is currency rates and how they match up to make sure that our … goods are not artificially inflated in price and their goods are artificially deflated in price,” Obama told senators from his Democratic party.

“That puts us at a huge competitive disadvantage.”

(Reporting by Jeff Mason)

http://www.reuters.com/article/idUSW…dsNews&rpc=401

UPDATE 1-On China, Obama says US must address currency rates
(adds quotes from Obama, background)
Currencies | Bonds | Global Markets

WASHINGTON, Feb 3 (Reuters) - President Barack Obama said on Wednesday it was important to address currency rates with trading partners such as China to ensure U.S. goods were not facing a disadvantage.

Obama said his administration was pushing China and other nations to enforce existing trade rules and open their markets in a reciprocal way.

“One of the challenges that we’ve got to address internationally is currency rates and how they match up to make sure that our … goods are not artificially inflated in price and their goods are artificially deflated in price,” Obama told senators from his Democratic Party.

“That puts us at a huge competitive disadvantage.”

A recent report by the Peterson Institute for International Economics estimated China’s yuan was undervalued by about 30 percent against all other world currencies and about 40 percent against just the dollar.

The Washington think tank also said four other East Asian economies — Hong Kong, Malaysia, Taiwan and Singapore — needed to let their currencies rise in value to correct imbalances in global trade.

U.S. manufacturers have complained for years that Beijing’s currency policies gives Chinese companies an unfair price advantage in international trade. However, China has resisted pressure on the issue and maintains its exchange rate policy is an internal matter.

Since taking office, Obama has twice declined to formally label China as a currency manipulator but faces a third decision on that issue in April when the Treasury Department’s next semi-annual report comes due.

Asked by Senator Arlen Specter whether he would support revising or revoking a trade treaty with China, Obama said that would be a mistake.

“Our future is going to be tied up with our ability to sell products all around the world, and China is going to be one of our biggest markets and Asia is going to be one of our biggest markets. And for us to close ourselves off from that market would be a mistake,” he said.

“It’s got to be reciprocal. So if we have established agreements in which both sides are supposed to open up their markets, we do so and then the other side is imposing a whole set of non-tariff barriers in place, that’s a problem. And it has to be squarely confronted,” he said.

The president, who cited a U.S. decision to impose a “safeguard” tariff on tire imports from China last year, said his administration was pushing for trade rules to be enforced.

“The approach that we’re taking is to try to get much tougher about enforcement of existing rules, putting constant pressure on China and other countries to open up their markets in reciprocal ways,” he said.

(Reporting by Jeff Mason; Editing by Doina Chiacu)