The Bush administration Sept. 9 sharply rejected calls from business and labor groups asking it to file a trade complaint against China's practice of pegging its currency to the U.S. dollar, saying such a move would amount to ``economic isolationism.''
``We do not need to conduct an extensive ... investigation to know that we have serious concerns about China's currency policy,'' United States Trade Representative spokesman Richard Mills said in news release.
The government rejected the China Currency Coalition's petition the same day it was filed, calling it ``reckless because the remedy it seeks of a 40 percent across-the-board tariff would put up walls around America, hurting U.S. exports, destroying U.S. jobs and endangering our economic recovery.''
The CCC's petition, however, reflects mounting frustration over a rising trade deficit with China, which coalition members say is destroying jobs, and mounting frustration that some members of the business community have with the Bush administration's China policy.
The group said the 200-plus-page petition's quick rejection raises ``questions as to whether it was even read by administration officials.'' The group took issue with being labeled reckless: ``We are simply requesting that the administration follow [World Trade Organization] rules.''
Not all of the business community agrees with CCC, however. High-profile groups like the National Association of Manufacturers elected not to join the complaint, which the government noted in its rejection. The Washington-based Society of the Plastics Industry Inc., which belongs to another China currency lobbying group with NAM, also declined to join the new petition.
CCC, which includes the steel industry, the AFL-CIO and other manufacturing groups like the National Tooling and Machining Association, contends that China illegally pegs its currency to the dollar, making Chinese exports as much as 40 percent cheaper than they should be.
The coalition said the government's approach to date has not worked, and argued that China's trade deficit with the United States is projected to climb from $125 billion last year to $160 billion this year.
``The diplomatic route that has been pursued by the administration has produced no substantive results to date,'' said David Hartquist, CCC's legal counsel and a lawyer with the Washington firm of Collier Shannon Scott PLLC.
The NTMA, which includes mold makers among its ranks, hoped that the U.S. government would change its position. Matt Coffey, president of the Fort Washington, Md., group, said that ``given the new numbers on the deficit with China and the pain being felt by the manufacturing community, the administration might have rethought this.''
But the administration argued that its diplomatic pressure on China has caused the country to move toward liberalizing its currency. The USTR said China very much wants to be treated as a market economy under U.S. trade laws, which will force it to make its currency more market-based.
Frank Vargo, vice president of Washington-based NAM, argued that filing the petition did not make sense.
``Why create a fuss with the administration?'' he asked.
He said NAM also has been pressing the administration to push China to change its currency policy. NAM was one of the founders of the Fair Currency Alliance, but when that group could not agree on whether to file a petition, some FCA members decided to form CCC.
Manufacturers and government officials who opposed the filing said it would have had to plow new legal ground. While supporters said they believed they had strong arguments, they acknowledged that bringing a WTO complaint focused on currency pegs would have been an unprecedented legal action.