By Doug Palmer

WASHINGTON (Reuters) - A U.S. business group urged Congress on Monday to reject legislation to force to raise the value of its currency but at the same time called on
Beijing
to ease trade tensions by further opening markets.

U.S. Chamber of Commerce President Tom Donohue, in a letter to lawmakers, said currency bills passed by the Senate Finance and Senate Banking committees could backfire on the by "jeopardizing our ability to increase American exports to our fastest-growing trading partner."

But the business group, in its annual report on trade, also urged
Beijing
to dismantle "discriminatory" industrial and investment policies that restrict access for American firms, particularly in the services sector.

"...must take steps to address these concerns or face a significant erosion of support for the U.S.-China commercial relationship in the ," said Myron Brilliant, the Chamber's vice president for
East Asia
.

Beijing needs to show "tangible progress" on opening its market when it hosts high-level trade talks with the in December, he said.

After years of pushing to move toward a market-based exchange rate, the Bush administration risks losing control of the issue to Congress.

The Senate Finance Committee approved a bill in July which would allow companies to ask the Commerce Department to impose duties on competing Chinese goods to offset the supposed advantage of 's exchange rate policy.

Many lawmakers and manufacturers believe 's exchange rate is undervalued by up to 40 percent, giving it a significant price advantage in international trade.

The Senate Banking Committee bill tightens the definition of currency manipulation to make it harder for Treasury Department to avoid making that finding on .

It also mandates action through the International Monetary Fund and the World Trade Organization against countries that manipulate their currencies.

"We have always said that needs to move to a market-determined currency regime, but we need to give time to do it," Brilliant said.

The bills could trigger a damaging trade dispute and are unlikely to persuade to open its financial services market, a big priority, he said.

Source: Reuters