WASHINGTON — The Retail Industry Leaders Association, representing Wal-Mart, Target and other mass marketers, on Monday urged Sens. Charles Schumer and Lindsey Graham to back off on a proposal to impose a 27.5 percent tariff on all Chinese imports if China doesn’t allow its currency to substantially appreciate.

Schumer and Graham need to decide whether to move forward this week.

The organization’s senior vice president of federal and state government affairs, Paul Kelly, made the remarks as Sens. Chuck Grassley (R., Iowa), chairman of the Senate Finance Committee, which has jurisdiction over trade, and Max Baucus (D., Mont.), the committee’s ranking Democrat, said they would introduce legislation today to address China’s “currency imbalances.” No details were disclosed.

Importers and retailers are concerned the Schumer-Graham bill will hurt their businesses, as well as consumers.

“They have not suggested anything as punitive as a 27.5 percent tariff across the board, which could do more damage to relations, not to mention being noncompliant with WTO agreements,” Kelly said. “I think they are trying to remain in the middle of the debate [with their legislation] and say that they have an alternative approach that might be more reasonable and constructive.”

Republican leaders agreed to bring the bill proposed by Schumer (D., N.Y.) and Graham (R., S.C.), which has bipartisan support, to a vote by the end of March. Last week, the two senators met with Chinese government and business leaders in China. The New York Times reported Monday that Schumer was more optimistic than Graham about China’s efforts to devalue its currency, suggesting that there might not be a vote on their bill this week.

Schumer’s office did not respond to requests for comment. Graham’s press secretary declined comment.

The developments come as Chinese Presi­dent Hu Jintao plans to make his first official visit to Washington in April and the U.S. Treasury Department is to release a biannual report determining whether China manipulates its currency — a ruling that could lead to sanctions in the WTO.

Critics of China’s currency policy, including U.S. textile executives, charge that it artificially lowers the price of Chinese goods by 15 to 40 percent and subsidizes exports, putting U.S. companies at a disadvantage and leading to job losses. They support the Schumer-Graham bill and feel China’s move last year to change the peg of the yuan to a so-called basket of currencies was insignificant.

This story first appeared in the March 28, 2006 issue of WWD. Subscribe Today.

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