WASHINGTON, Sep 24 (Reuters) A US business group urged Congress today to reject legislation to force China to raise the value of its currency but at the same time called on Beijing to ease trade tensions by further opening markets.
US Chamber of Commerce President Tom Donohue, in a letter to lawmakers, said currency bills passed by the Senate Finance and Senate Banking committees could backfire on the United States by ''jeopardizing our ability to increase American exports to our fastest-growing trading partner.'' But the business group, in its annual report on China trade, also urged Beijing to dismantle ''discriminatory'' industrial and investment policies that restrict access for American firms, particularly in the services sector.
''China ... must take steps to address these concerns or face a significant erosion of support for the US-China commercial relationship in the United States,'' said Myron Brilliant, the Chamber's vice president for East Asia.
Beijing needs to show ''tangible progress'' on opening its market when it hosts high-level trade talks with the United States in December, he said.
After years of pushing China to move toward a market-based exchange rate, the Bush administration risks losing control of the issue to Congress.
The Senate Finance Committee approved a bill in July which would allow US companies to ask the Commerce Department to impose duties on competing Chinese goods to offset the supposed advantage of China's exchange rate policy.
Many lawmakers and manufacturers believe China's exchange rate is undervalued by up to 40 per cent, giving it a significant price advantage in international trade.
The Senate Banking Committee bill tightens the US definition of currency manipulation to make it harder for Treasury Department to avoid making that finding on China.
It also mandates US action through the International Monetary Fund and the World Trade Organization against countries that manipulate their currencies.
''We have always said that China needs to move to a market-determined currency regime, but we need to give China time to do it,'' Brilliant said.
The bills could trigger a damaging trade dispute and are unlikely to persuade China to open its financial services market, a big US priority, he said.
Reuters KK VP0255