America's top trade envoy said late this week that it's unlikely negotiators will settle the farm trade dispute at the summit. But U.S. Trade Representative Rob Portman says progress toward an overall trade deal is possible ... and he says the U.S. trade team will work hard to avoid a watered-down agreement.
The Bush administration already is hearing criticism of U.S. trade impotence from many quarters, including Congress. Lawmakers from farm and manufacturing states say they're fed up with the administration's inability to cope with a Chinese economic juggernaut that's a big contributor to the U.S. trade deficit.
At the heart of their discontent are allegations the Chinese are playing fast and loose with their monetary policy.
The Bush administration this week said it was satisfied that China was NOT manipulating its currency to gain an unfair trade advantage. But the White House said it would continue to pressure the Chinese to allow the value of the yuan to be set by market forces.
That assessment, submitted in a report to Congress, did NOT sit well with some lawmakers. They claim Chinese practices have devalued the currency by as much as 40 percent ... and have contributed to the soaring U.S. trade deficit with China.
The U.S. last year had a trade deficit of $162 billion with China, the largest amount ever recorded with a single country. The trade deficit this year will be even higher, approaching $200 billion.
American manufacturers, in particular, are concerned with China's currency practices. By allowing the yuan to be undervalued, Chinese goods become much cheaper in the States ... while U.S. goods become more expensive to Chinese consumers.
Last summer, China pledged to let its currency fluctuate by as much as three-tenths of a percent on a daily basis. But for the past four months, the yuan essentially has been unchanged in value.
Lawmakers, including Senator Charles Schumer, have introduced legislation to impose stiff penalties on all Chinese imports unless China allows a greater revaluation of its currency. The New York Democrat said there is no doubt in the minds of most economists that China is manipulating its currency.