Laffer: Address Currency in the TPP

By Elizabeth Brotherton-Bunch
Feb 12 2015 |
Art Laffer, seen here with President Ronald Reagan, says it is vital the Trans-Pacific Partnership include a strong and enforceable currency manipulation provision.

A leading conservative economist is among those on both sides of the aisle calling for action.

It’s rare to see left and right agree on anything these days.

But if there’s one thing bringing everyone together, it’s the need to make sure currency manipulation is addressed in future trade agreements, including the Trans-Pacific Partnership (TPP).

Case in point: Economist Art Laffer hit the Hill on Thursday to call on Congress to include strong and enforceable currency provisions in trade agreements. Laffer also promoted his new study that looks at how currency manipulation distorts free trade.

Now Laffer — who served on President Ronald Reagan’s Economic Policy Advisory Board for most of the 1980s — isn’t exactly a stereotypical anti-trade proponent, mind you. In fact, he called himself “a huge free trade fan” who believes “free trade is essential to prosperty” during a briefing held on Capitol Hill on Thursday afternoon.

But Laffer also knows that in order for free trade to work properly and benefit everyone, there has to be a level playing field for all players. Otherwise, American workers lose. As Laffer writes:

“Persistent currency undervaluation has benefited the currency manipulators at the expense of countries allowing the flexible adjustment of exchange rates… It is likely that millions of jobs in the U.S. were lost as a result of current account imbalances that were generated, in part, by currency manipulation.”

Laffer’s job loss findings are well substantiated. Nearly 900,000 U.S. jobs were lost in 2013 alone due to the trade deficit with Japan (which was driven by Japan’s currency manipulation). Roughly 466,000 of those jobs were in manufacturing.

Laffer joins leading economists such as former Carter administration Assistant Treasury Secretary C. Fred Bergsten in calling on Washington to address currency manipulation. He also joins a bipartisan group of Members from both chambers in pushing for such a provision in the TPP, a call that has grown louder in recent weeks.