The U.S. Senate passed a bipartisan bill Tuesday aimed at pressuring China to accelerate the appreciation of its currency against the dollar.


The Currency Exchange Rate Oversight Reform Act of 2011, which would give the Obama Administration stronger authority to address currency manipulation and misalignment, cleared the Senate by a vote of 63 to 35.


“Today, we abandoned the unilateral disarmament approach we’ve taken for the past decade,” said Sen. Sherrod Brown, D-OH, the bill’s primary sponsor. “This bill has the potential to create or save two million jobs-at no cost to taxpayers-while raising revenue and reducing our deficit.”


 

Recently, the Economic Policy Institute (EPI) and the Alliance for American Manufacturing released a new report showing that that the growing trade deficit with China, caused in large part by China’s illegal currency manipulation, has cost the United States more than 2.8 million jobs since 2001, including more than 1.9 million manufacturing jobs. In June, EPI released a report showing that addressing Chinese currency manipulation could support the creation of 2.25 million American jobs.

 

Still, the bill is opposed by the National Retailer Federation, the American Apparel and Footwear Act (AAFA) and dozens of other trade associations representing U.S. brands and retailers.


 

The bill is intended to pressure China to accelerate the appreciation of the Renminbi against the dollar. Among other things, it makes it easier for the executive branch to determine that currency manipulation can be addressed through trade remedies. AAFA has argued that the bill will damage a relationship that is vital to a key export market, and, in the process, hurt the very U.S. workers the legislation is purported to protect.


 

Next steps are unclear, the AAFA reported to its members Tuesday on the eve of the vote. Although the legislation enjoys populist support in the both chambers, the Administration has signaled it prefers to address the China currency issue through diplomatic and multilateral means. In a letter in May, the House Ways & Means Committee urged the Obama Administration to press the topic at the upcoming U.S.-China Economic Strategic & Economic Dialogue. The Republican-controlled House has declined to indicate if it will take up the issue, should the Senate pass the bill.