Treasury Report Fails to Take Action Against Currency Manipulation
The U.S. Department of Treasury on Friday released its semi-annual Report on the Foreign Exchange Policies of Major Trading Partners of the United States. This was the 16th and final opportunity under the Obama administration for Treasury to use all of the tools at its disposal to address exchange rate manipulation – and it again declined to do so, despite the recent drop in the yuan's value to a six-year low.
Said Alliance for American Manufacturing President Scott Paul:
American exports are lagging and factory jobs have been stagnant since November 2014, while much of the rest of the private sector has continued to recover. Manufacturing’s biggest challenge now is the toxic combination of weak global demand and the market-distorting actions – and inactions – of foreign governments. Our policymakers must ensure those governments aren’t exporting their own unemployment problems to the United States.
Strong deterrents to exchange rate manipulation and misalignment are essential. Unfortunately, the tools available under existing domestic policy and the proposed Trans-Pacific Partnership fall far short of what’s needed to credibly deter currency manipulation. Governments like China and Japan, which have long records of market-distorting currency manipulation, should know that when they unfairly game the market there will be consequences.
I appreciate that Treasury kept China, South Korea, Taiwan, Japan and Germany on its watch list in its exchange rate report, and added Switzerland. But this time, in the final such report from the Obama administration, Treasury missed an opportunity to set a bolder precedent on enforcement. That’s something President Obama himself complained about in 2009 when referencing the inaction of the Bush administration on China.
I’m hopeful Congress will understand that as they seek to open markets overseas, stronger tools must be put in place to level the playing field for American workers and businesses.