CANBERRA -- Australia's parliament is likely to open an inquiry into alleged Asian currency manipulation, mainly targeting major trade partner China and mirroring political anger in the United States over claims that Beijing keeps its yuan artificially low.
Independent Senator Nick Xenophon has called for the inquiry and already has support from the Greens, which hold the balance of power in the Senate. Many senators from the ruling Labor party and conservative opposition are also expected to back it.
The government, however, has shown little appetite to enact policies smacking of protectionism, particularly as Australia is in the unusual position of running a trade surplus with China.
Xenophon said that in addition to the inquiry, he was drafting amendments to anti-dumping trade law which would allow Australia to impose heavy duties on imports from countries that undervalued their exchange rates.
"Manufacturers can't compete fairly with goods that are in effect being dumped if their currency is being manipulated," he was quoted as saying in The Australian newspaper on Friday.
Legislation aimed at punishing China for keeping the yuan artificially low in order to help exports survived a key vote in the U.S. Senate on Thursday, while President Barack Obama accused China of "gaming" international trade.
But Obama stopped short of explicitly backing legislation that calls for U.S. tariffs on imports from countries with deliberately undervalued currencies to boost exports, warning it could contravene global trade rules.
In Australia, peak trade-union body said the Labor government, which has its roots in the labour movement, should help lead global efforts to pressure China to float the yuan, because it was hurting local manufacturers.
"Australia is very well respected in the global trade market and I don't see why our (government) treasurer should not start that conversation. Whether it has any impact or not would wait to be seen. But certainly somebody has to start it," Australian Council of Trade Unions chief Ged Kearney said.
Australia is a traditional U.S. ally but China is its biggest trading partner with two-way trade worth more than $100 billion in 2010, based mainly around resource exports to China.
Treasurer Wayne Swan, responding to pressure from business groups and unions this week to do more to pressure China, urged all countries to embrace market-based exchange rates, or risk a damaging global outbreak of protectionism.
The influential Greens party voiced support on Friday for Senator Xenophon's claims of currency manipulation.
"China's deliberately undervalued currency gives it an unfair trading advantage that is hurting many small businesses, including those in education and tourism, and harms the broader Australian economy," Greens Leader Bob Brown told Reuters.
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