Sponsors of US tariff bill may put off vote until next year

The chief sponsors of a US Senate bill threatening China with a 27.5 per cent tariff on its exports to America have said they will delay a promised vote on the bill until March 31 at the latest.

Senator Charles Schumer, a New York Democrat, said he and Senator Lindsey Graham, a South Carolina Republican, were hopeful President George W. Bush's visit to China this weekend would prompt Beijing to take steps to revalue its currency.

"Senator Graham and I do not think it would be appropriate to vote on this bill while the president is there, so we have agreed to delay the vote," Senator Schumer said.

The legislation is driven by frustration with the US trade deficit with China, which hit a record US$162 billion last year and is expected to exceed US$200 billion this year.

"We hope and pray that the Chinese will move. We don't want to tell them how quickly they should move, but we do need to see some more movement on something that just about everyone agrees ought to happen," Senator Schumer said.

Senator Schumer and Senator Graham unexpectedly won a procedural vote 67-33 on their bill early this year.

They agreed in June to put off a promised vote on the bill after a meeting with Treasury Secretary John Snow and Federal Reserve Chairman Alan Greenspan convinced them Beijing was about to act on currency reform.

As part of the deal, Senate leaders promised the two senators another vote opportunity by the end of the year.

In July, Beijing ended a policy of pegging the yuan at 8.28 to the dollar, revaluing it by 2.1 per cent and moving to a managed float with reference to a basket of currencies.

It has since risen only slightly, frustrating many US lawmakers who had expected more from the July action.

In a speech in Kyoto, Japan, on Wednesday, Mr Bush urged Beijing to liberalise its currency, open its domestic market to US exports and create a "level playing field" for trade.

But the Bush administration has opposed the Schumer-Graham bill. Mr Snow and Mr Greenspan again met the senators this month on the legislation.

The new agreement allows the senators to have a vote on its bill when Congress returns in December from the US Thanksgiving holiday break.

The two senators can also decide to delay a vote until "no later than March 31, 2006, if we determine that China is making additional progress on the currency issue", Senator Schumer said.

Senator Graham said he was "guardedly optimistic" that Mr Bush's visit to China would prompt further action on the yuan. How Beijing handled the currency issue would be a "defining moment" in US-China relations, Senator Graham said.