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Administration Declines Section 301 Petition on China's Currency Policies

June 13, 2007



Trade Representative Susan C. Schwab today issued the following statement
regarding a petition requesting that the United
States initiate World Trade Organization dispute settlement
procedures against China over that country’s currency
exchange rate policies:

“The Bush Administration has been consistent in its
position with respect to China’s exchange rate policies. 
We believe that China must move to adopt a flexible,
market-based exchange rate.  The Department of the Treasury, which leads
the U.S. government’s
dialogues on currency issues, continues to work assiduously to encourage Chinese
action to this end, including in the Strategic Economic Dialogue, which met in
Washington on
May 22 and 23.   

“As noted by the Treasury Department in the Report to
Congress on International Economic and Exchange Rate Policies issued today,
‘While China has taken some steps to increase the flexibility of the renminbi,
the pace of appreciation that the authorities have allowed is much too slow and
should be quickened.’

“The Administration is committed to using all available
tools to ensure a level playing field in international trade, including bringing
WTO cases where we believe such cases promise to be the most effective course of
action.  This commitment has clearly been demonstrated in action. 
Indeed, in the past 15 months, the Administration has brought four WTO cases
against China (challenging
China’s IPR enforcement
regime; China’s denial of
market access to U.S.
copyright-intensive industries; China’s use of prohibited subsidies; and
China’s discriminatory treatment of
imported auto parts).

“I applaud Secretary Paulson’s strong leadership in
promoting high-level U.S.-China discussions on economic issues, and on exchange
rate issues generally.  We do not believe that this Section 301 petition is
likely to be the most productive way to secure Chinese movement towards currency
flexibility.  Rather, the Administration continues to believe that firm
engagement with China, in concert with international
institutions and other countries, offers the best chance of success.  We
therefore decline to accept this petition.

“The Administration will continue to work with Members of
Congress on these issues as we seek to achieve our common goals: a more
flexible, market-based exchange rate for China's currency
and a level playing field for American businesses, workers, farmers and service


On May 17, the Office of the U.S. Trade Representative
received a petition under Section 301 of the Trade Act of 1974 on the issue of
China's currency, seeking the
invocation of WTO dispute settlement against China and alleging that China’s exchange
rate policies are inconsistent with IMF rules.    

In most respects, this petition is substantively the same
as the two petitions filed in September 2004 and April 2005.