The top Republican and Democrat on the Senate Finance Committee plan to offer a bill next week that addresses concerns about China's currency practices and other trade irritants in a "constructive" manner, a spokeswoman for one of the senators said on Wednesday.

Senator Charles Grassley (R-IA) is seen in Lamoni, Iowa, February 21, 2006. Grassley and Sen. Max Baucus, a Montana Democrat, 'are working on legislation to respond to major U.S.-China issues from currency to trade enforcement,' a Grassley spokeswoman said. [Reuters]

Committee Chairman Charles Grassley, an Iowa Republican, and Sen. Max Baucus (news, bio, voting record), a Montana Democrat, "are working on legislation to respond to major U.S.-China issues from currency to trade enforcement," a Grassley spokeswoman said.

"This legislation is intended to take a constructive approach to engaging China and to encourage China to abide by the norms expected of a mature economy that derives great benefit from an open international trading system," she said, giving the first details on the bill.

Grassley and Baucus have planned their legislation as an alternative to a popular, but controversial, bill that threatens China with across-the-board U.S. tariffs if it does not revalue its currency. The Senate is scheduled to vote on that measure by March 31, unless its chief sponsors -- who are currently in China -- agreed to a delay.

China currency's policy is a major irritant in bilateral trade relations. Many lawmakers and manufacturers believe China deliberately undervalues its currency by 15 to 40 percent, giving Chinese companies a huge, unfair price advantage over their American competitors and helping fuel the U.S. trade gap with China, which hit a record $202 billion last year.

Grassley and Baucus also are "increasingly frustrated with the lack of progress on China's currency. The Chinese took an initial step last July (toward revaluing their currency) but they haven't allowed the mechanism they adopted to operate freely, so the senators' legislation will revisit the issue of currency exchange rates," the Grassley spokeswoman said.

The authors of the bill threatening China with tariffs -- Sen. Lindsay Graham, a South Carolina Republican, and Sen. Charles Schumer (news, bio, voting record), a New York Democrat -- have been in Beijing this week to learn first hand what China intends to do on the currency issue.

Business groups have warned the Graham-Schumer bill could roil relations with the United States' third largest trading partner and put Washington in violation of World Trade Organization rules.

But with the congressional election looming in November, many lawmakers are anxious to vote for a measure that makes them look tough on China.

"Senators Grassley and Baucus are working to develop and introduce a bill next week that will garner broad bipartisan support," the Grassley spokeswoman said.

"The bill also will address congressional concerns regarding enforcement of U.S. rights under international trade agreements, by focusing efforts to prioritize and respond to the most significant violations," she added.

"Other elements are under active consideration for the legislation," she said.