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Source: Reuters

US critics of China seize on Venezuela devaluation

Published: 13 Jan 2010 18:45:07 PST

WASHINGTON, Jan 13 - U.S critics of China's trade policy on Wednesday seized on Venezuela's recent currency action to prod the U.S. Congress to pass legislation targeted at countries that manipulate their currency.

Venezuelan President Hugo Chavez last week ordered a devaluation of the country's bolivar currency, cutting the exchange rate against the dollar in half for oil income and goods deemed nonessential.

The move is expected to hurt earnings of U.S. consumer goods companies with substantial business in Venezuela, such as Avon Products Inc and Colgate-Palmolive Co.

The Fair Currency Coalition, a U.S. business group that includes steel, textile and other manufacturers, said Chavez's action demonstrates why the United States must strengthen the tools it has to deal with unfair currency moves.

"China's predatory currency policy ... has been a significant factor in why the United States has more than 1.5 million fewer private sector jobs than it did a decade ago, including more than 5.6 million fewer manufacturing jobs," the group said in statement.

It urged Congress to pass legislation that would allow the United States to slap duties on imports from countries with prolonged misaligned currencies.

The main target of the bill is China's currency, the renminbi, which most economists agree is significantly undervalued against the U.S. dollar, giving Chinese companies a big price advantage.

The legislation has 78 co-sponsors in the House of Representatives and 7 in the Senate.

Supporters are casting the legislation as a job creation bill in the hope that concern about high U.S. unemployment will pressure Democratic leaders to schedule votes on it.

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