A pop quiz for Senators Baucus, Graham, Grassley, and Schumer

The Financial Times' Eoin Callan, Krishna Guha, and Richard McGregor report on a bipartisan effort to introduce a bill aimed at punishing China for currency manipulation: China came under increased pressure to revalue its currency on Wednesday as a bipartisan group of US senators introduced legislation designed to push the Bush administration towards a full-blown trade dispute with Beijing. The bill would send exchange rate disputes to the World Trade Organisation by treating them as unfair export subsidies and includes a range of sanctions. The move will increase pressure on the White House to toughen its stance on Beijing. Lawmakers say China?s fixed exchange rate subsidises its exports and has contributed to a record annual bilateral US trade deficit of $233bn (?118bn).... The legislation has gathered momentum in the Senate and would allow US companies to appeal for anti-dumping duties on Chinese goods based on the distorted value of the currency. The bill was introduced by Max Baucus, chairman of the Senate finance committee, and co-sponsored by Charles Grassley, ranking Republican on the committee. It is also backed by Charles Schumer and Lindsey Graham, who previously proposed a unilateral 27.5 per cent US tariff on Chinese goods that would have violated WTO rules. A tougher version of the bill is being prepared by a bipartisan group in the House of Representatives. Mr Schumer said: ?This breakthrough proposal is like nothing else because it?s tough, wide-reaching and WTO-compliant. The previous legislation got China?s attention; the purpose of this legislation is to force change.? David Christy, a lawyer at Miller and Chevalier, said any attempt by the US to apply anti-dumping duties against Chinese goods based on the value of the country?s currency could fall foul of WTO rules. The US Treasury, meanwhile, again shied away from branding Beijing a currency manipulator in its semi-annual currency report to Congress. Meanwhile, Chris Nelson reports on how hearings on the Korea-U.S. Free Trade Agreement went earlier this week. Nelson is usually respectful in his language, so this passage is particularly telling: Deputy USTR Karan Bhatia and [Assistant Secretary of State] Chris Hill spent the morning being whipped, insulted, and generally abused, on a bipartisan basis, by the House Foreign Affairs' subcommittee on trade and terrorism - an interesting combination of jurisdictions. If this trend continues, and if the Administration cannot organize a fact-based presentation which manages to offset the emotional, fundamentally fact-bereft bombs being thrown, KORUS is a dead letter.... The Members came armed to the teeth with attack questions prepared by the Auto Caucus, and Chairman Brad Sherman let them make their opening statements unedited for the first 47 minutes. Bhatia and Hill were then given 5 minutes - timed to the milisecond - to summarize their testimonies. So absurdly out of balance was the process that Sherman actually banged his gavel to interrupt Bhatia's testimony as it sought to answer the key auto questions already thrown at him. Hill had on the table with him a copy of the book "The Power of Faith and Fantasy", and one suspects it took all his diplomatic gravitas to refrain from flinging it at Manzullo, when he was bitterly insulted for the sin of helping Chrysler organize a display of certain products on his embassy residence's lawn, while serving as US Ambassador in Seoul.... The impassioned speeches also offered brilliant insights such that the Administration's claims for good jobs being created by FTA's could not possibly be true, because when you have a trade deficit, that means there has to be a big job loss. We're not making this up. In fact, on one level, this hearing was an insult to the intelligence of Congres. However, on the political level, this hearing was serious as a heart-attack, as it shows that until or unless the US business interests which would benefit from KORUS get organized and step foward - services, banking and investments, etc. - that the Auto Caucus can win by bullying and the Big Lie. And in fairness to the Members who unwittingly embarrassed themselves this morning, they are at least honestly reflecting the pervasive angst over globalization which political America is wrestling with these days. Clearly, Congress is upset about U.S. trade policy. And when congressmen are upset, stupid policies usally follow. Here's a multiple-choice question to the proposers of the new China bill: The American economy is experiencing rising interest rates and worries about rising inflation. Neither of these trends bodes well for average Americans. What's the best way for Congress to exacerbate this trend? A) Subpoenaing White House aides. B) Getting mired down over earmark reform. C) Fret about Congress' low standing in public opinion. D) Raise the price and increase uncertainty of import flows? I'm sure Chuck Schumer, eminent economist, will figure out the correct answer. Meanwhile, James Pethokoukis worries that Congress is partying like it's 1929.