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GM, Other Manufacturers Plan To Accuse Japan, China Of Undervaluing Their Currencies

U.S. manufacturers say that Japan and China keep their currencies artificially low to keep exports cheap compared to U.S. made products.

WASHINGTON (AP) - At an unusual congressional hearing slated for Wednesday, General Motors Corp. plans to accuse Japan of keeping the yen's value artificially low so that its exports are unfairly cheap compared to prices of U.S.-made cars.
Other manufacturers plan to accuse China of similar currency policies as lawmakers consider whether the two countries are deliberately undervaluing their currencies.
In a rare move, Rep. Sander Levin, D-Mich. chair of the House Ways and Means subcommittee on trade, has asked members of the Financial Services Committee and Energy and Commerce Committee to join the hearing.
The purpose of the hearing, according to Levin's office, is to consider whether China and Japan are intervening in currency markets unfairly, what effect those interventions would have on U.S. companies, and what action, if any, the U.S. government could or should take.
Mustafa Mohatarem, GM's chief economist, plans to testify that Japan has ''deliberately weakened the yen to promote its exports at the expense of U.S. and other global manufacturers,'' according to the Automotive Trade Policy Council, which represents GM, Ford Motor Co. and DaimlerChrysler AG.
The hearing comes two weeks before the ''Strategic Economic Dialogue,'' a series of meetings between U.S. and Chinese officials scheduled for May 23-24 in Washington.
China's currency, the yuan, is likely to be on the agenda for the talks. Treasury Secretary Henry Paulson has said that China must move faster toward letting its currency move in response to market forces. China's government currently allows the yuan to trade only within a narrow band.
Donald Evans, chief executive of the Financial Services Forum (FSF) and a former Commerce Secretary, is set to testify that the U.S. should do more to urge China to open its markets to foreign competition, said Taylor Griffin, an FSF spokesman.
Increased foreign competition would help China's financial industry modernize and make it easier for the government to let the yuan react without restrictions to global market forces, Griffin added. FSF members include Citigroup Inc., Wachovia Corp. and American International Group, Inc.
Government officials, economists, labor union representatives and small manufacturers are also scheduled to testify.

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