House Pushes For Currency Manipulation To Be Addressed In TPP, Senate Introduces Currency Exchange Rate Oversight Reform Act Of 2013
Last week, 226 House lawmakers sent a bipartisan letter — led by Reps. Mike Michaud, D-Maine, John
D. Dingell, D-Mich., Sam Graves, R-Mo., and Rick Crawford, R-Ark. — to President Obama urging him
to address currency manipulation in the Trans-Pacific Partnership (TPP) as negotiations continue.
The letter states: "Exchange rates strongly influence trade flows, and, in recent years, currency manipulation has contributed to the U.S. trade deficit and cost us American jobs. Incorporating currency provisions in the agreement will strengthen our ability to combat these unfair trade practices and help to create a level playing field for American workers, businesses, and farmers.
"Undervalued exchange rates allow other countries to boost exports of their products and to impede exports of ours. They also contribute to trade imbalances and market access limitations that make it difficult for U.S. companies to compete in foreign countries."
Lawmakers are particularly concerned over the inclusion of Japan in the agreement, because the country "has a well-documented history of manipulating the value of the yen to help its exporters," Rep. Dingell said. "We cannot allow this practice to continue if Japan is to enjoy the benefits of free trade with the United States. Strong and enforceable currency manipulation provisions must be included in TPP in order to prevent Japan from continuing in this market-distorting and unfair practice."
Japan will join the 11 TPP member countries — Australia, Brunei Darussalam, Canada, Chile, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States and Vietnam — at the 18th round of negotiations scheduled to be held July 15-25 in Kuala Lumpur, Malaysia. Upon Japan's entry, TPP countries will account for nearly 40 percent of global gross domestic product and approximately one-third of total world trade, the U.S. Trade Representative reports.
Following Japan's admission into the negotiations, China reportedly has said it is considering joining the U.S.-led TPP trade talks.
The Alliance for American Manufacturing (AAM) praised the bipartisan group of House members for its letter, stating: "These Members have sent a clear message to President Obama that trading partners like Japan must open their markets and stop manipulating their currencies if they hope to join the TPP. The Asia-Pacific region includes a number of countries that manipulate their exchange rates. Addressing currency manipulation is critical to ensuring that U.S. companies gain reciprocal market access and a level playing field in the TPP."
In the Senate, Sherrod Brown, D-Ohio, Charles Schumer, D-N.Y., Lindsey Graham, R-S.C., Debbie Stabenow, D-Mich., Jeff Sessions, R-Ala., Robert Casey, D-Pa., Richard Burr, R-N.C., and Susan Collins, R-Maine, have introduced the Currency Exchange Rate Oversight Reform Act of 2013 — a bipartisan legislation intended to reform and enhance currency exchange rate oversight by providing tools to address the economic impact currency manipulation has on U.S. manufacturers and by specifying consequences for countries that fail to eliminate currency misalignment. The legislation mirrors the Currency Exchange Rate Oversight Reform Act of 2011 (see " Senators Introduce Currency Exchange Rate Oversight Reform Act Of 2011," Sept. 27, 2013, TextileWorld.com), which was passed by the Senate in a vote of 63-35 on Oct. 11, 2011.
The Fair Currency Coalition has urged the Obama administration to endorse the bill, saying: "On behalf of its broad membership, the FCC is delighted and grateful that the bill has been reintroduced in the U.S. Senate. Competitive currency depreciation by national governments has only become more prevalent in the last two years, distorting as much as one-third of the global economy. Manipulated exchange rates subvert the normal working of market forces, skew trade and investment flows, and enable foreign governments to pick winners and losers among American industry. This mercantilist behavior has created serious damage to the U.S. economy and its workers and generated dangerous global imbalances that will only worsen if timely corrective measures are not taken."
The AAM also has voiced its support for immediate passage of the bill.
June 11, 2013