WIll currency manipulation be addressed in the TPP? We sure hope so.
It’s full steam ahead for the Trans Pacific Partnership (TPP) negotiations. Today, ahead of wider negotiations that will include all parties to the deal, a high-level American delegation is in Japan hashing out the specifics between the TPP’s two biggest players.
The latest bilateral talks do not cover the elimination of tariffs on vehicles or farm products, a topic Japan is keen to discuss in the TPP negotiations.
The two countries announced the parallel dialogue in April, saying they had completed bilateral preparatory talks for Japan’s participation in the TPP talks and agreed that U.S. tariffs on Japanese automobiles would be phased out using the longest staging period for any product in the TPP talks.
Oh, that's nice. It’s commendable that the Japanese government plans to stand up for its national auto industry. But will the U.S. do the same for its own? American automakers have said there’s one provision, presently absent, that they need before considering a TPP deal: language to prevent currency manipulation.
There’s serious concern about the TPP's fairness coming from the Big Three. Ford, in particular, has a beef with this deal:
Ford executives are rightly proud that their company — without a federal bailout — took steps to right-size itself, boost productivity, rebuild its credit rating and revamp its product lineup to be competitive with the world’s top automakers.
But then, since last November, they’ve watched as their company’s Japanese rivals got a huge boost from a drop of nearly 20% in the value of the Japanese yen compared to the U.S. dollar.
A study last year by the Center for Automotive Research in Ann Arbor projected that a weaker Japanese yen, combined with other tariff provisions in a potential TPP trade deal, could result in the loss of 26,500 U.S. jobs. The weaker yen also makes vehicle exports and auto parts from Japan more price-competitive in other markets where they compete with Ford, GM and Chrysler.
Will the U.S. negotiators demand that an anti-currency manipulation rule make it into the TPP? It might be safer to not hold your breath. But at least we know where a big chunk of the American manufacturing sector stands on the issue.
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