Lots of Reasons to SelectUSA, but Currency Isn’t One of Them

By Matthew McMullan
Mar 24 2015 |
There’s gonna be a whole lot of this going on at the SelectUSA summit this week. | Photo by flickr user flazingo_photos

The dollar, it’s too strong!

It’s time! Time, again, for the Commerce Department’s SelectUSA Summit, meant to draw foreign investment into the United States. That’s a good thing – opening up the United States to investors looking to lay down roots means economic activity and, ultimately, jobs for the locals.

The Obama administration is going all out to promote the summit. The president himself made an appearance yesterday, and about half of his cabinet are scheduled to drop in as well. They’ll cite a list of reasons why it makes sense to, you know, select the USA for investment. And in doing so they’ll point to recent employment trends, low energy costs, America’s political stability, and whatnot.

What they won’t be able to point to is the American dollar. The dollar, it’s too strong! From NPR:

The U.S. economic expansion has been gaining so quickly that foreign investors are paying attention. Many want to open factories and offices that could swell their profits while creating jobs for Americans.

But U.S. growth also has pushed up the value of the dollar, which has surged about 14 percent over the past year relative to other currencies. That makes it more difficult for foreigners to spend their money in the U.S. The dilemma is not lost on the White House.

This dilemma isn’t enough to press for a currency manipulation rule in the trade agreements such as the Trans-Pacific Partnership (TPP) that the administration is pursuing, much to the befuddlement of economists. The administration was pushing those deals at SelectUSA, in fact, and currency concerns were not on their lips.

That currency-related silence comes at the same time that former International Monetary Fund (IMF) chief economist Simon Johnson is out with a new op-ed all about the need to include an enforceable currency manipulation provision in the TPP. As Johnson writes:

US President Barack Obama correctly argues that this is an occasion to set the rules for trade and investment in the twenty-first century. Yet the US Treasury Department and the US Trade Representative steadfastly refuse to include any language prohibiting currency manipulation in the TPP, for five main reasons – none of which fits the facts.

Meanwhile, the strong dollar is helping to push a lot of industry offshore. Just look at what’s been happening to the auto parts industry, where imported parts now make up about $12,000 of content in every American light vehicle built. That’s sent more and more of this industry overseas, and it has pushed wages down in the United States.

And low wages aren’t exactly the kind of story that sells with the American public – maybe at SelectUSA, but not on Main Street.