The currency issue bubbles in the TPP debate
Negotiations on the proposed Trans-Pacific Partnership (TPP) have gone 19 rounds. But just yesterday, Treasury Secretary Jack Lew and United States Trade Representative Michael Froman sat down with members of the House Ways and Means Committee to talk about including a rule to punish signees if they engage in the process. Japan, a major economic power and the most recent addition to the TPP negotiations, has a habit of undervaluing its currency.
We’re glad they did. Currency manipulation has long been a hot topic on Capitol Hill. In fact, a bill that would add currency manipulation to the list of actionable offenses American manufacturers could cite in potential trade cases is circulating in the House of Representatives. As of today, H.R. 1276 (The Currency Reform for Fair Trade Act) has 125 co-sponsors.
But outside of H.R. 1276, will a specific currency amendment make it into the TPP? Committee Chair Dave Camp (R-Michigan) came out of the meeting urging patience and pragmatism. And a source close to the meeting said Lew, Froman, and the committee members discussed how moving major economies toward "market-determined exchange rates" (a polite way of saying: currency rates that aren't determined by a country's central bankers in an effort to cheat at trade) remains a top priority.
The trade deal could greatly affect automakers in Camp’s home state if a currency manipulation rule is not included. In fact, Sandy Levin, the ranking Democrat on Ways and Means and Camp's fellow Michigander, had this to say about a TPP deal back in July:
While many non-tariff barriers have kept the Japanese auto market closed for decades, currency manipulation has been one of the most significant and persistent.
Here at Alliance for American Manufacturing, we agree with Rep. Levin — and we'll be watching as Congress and the administration talk further about those "market-determined exchange rates."
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