Trade Promotion Authority legislation includes weak language on currency cheating.
Update: Sens. Orrin Hatch and Ron Wyden joined House Ways and Means Chairman Paul Ryan (R-Wis.) to introduce Trade Promotion Authority (TPA) legislation on Thursday afternoon. Here's all the language on currency cheating included in the bill:
"The principal negotiating objective of the United States with respect to currency practices is that parties to a trade agreement with the United States avoid manipulating exchange rates in order to prevent effective balance of payments adjustment or to gain an unfair competitive advantage over other parties to the agreement, such as through cooperative mechanisms, enforceable rules, reporting, monitoring, transparency, or other means, as appropriate."
Update No. 2: The current draft of the TPA bill doesn't put workers and American manufacturers front and center, Alliance for American Manufacturing (AAM) President Scott Paul says. After all, negotiating objectives — however well intended — are usually completely ignored. As Paul says:
"We'll be working closely with lawmakers from both parties to ensure that our trade laws are reformed and modernized to guarantee a truly level playing field. U.S. companies and American workers should not have to suffer plant closures and layoffs before they can get relief under our trade laws. We will also insist that currency manipulation be deterred in our domestic laws as well as within the proposed Trans-Pacific Partnership."
Read Paul's full remarks here.
The Senate Finance Committee is expected to unveil Trade Promotion Authority (TPA) language on Thursday afternoon — but testimony from a hearing on Thursday morning indicates that strong, enforceable language on currency cheating won’t be included.
Several committee members directly asked Treasury Secretary Jack Lew at the morning hearing whether currency will be addressed in TPA, also known as fast track. Lew responded that while the Obama administration “will not tolerate” currency manipulation, it would not be appropriate to include it in TPA.
But several senators insisted that language to prevent currency cheating (and effectively address it when it happens) must be included in TPA for it to garner support. Sen. Chuck Schumer (D-N.Y.), for example, noted that during negotiations for past trade agreements there has been talk about trade enforcement but “we get none.”
“That’s why the deck is stacked against us,” Schumer said, later adding: “At the very least, let’s get a strong currency bill that is unilateral, that lets our companies when aggrieved take action.”
Schumer added that while the United States has “had the option to call China a currency manipulator for 20 years, we haven’t done it.”
That’s why the deck is stacked against us. At the very least, let’s get a strong currency bill that is unilateral, that lets our companies when aggrieved take action. Sen. Chuck Schumer (D-N.Y.)
There is strong congressional support for addressing currency in the TPP, several senators noted. In fact, 60 senators signed a letter in 2013 wanting strong currency language in the proposed Trans-Pacific Partnership (TPP), said Sen. Debbie Stabenow (D-Mich.).
“I don’t know how this passes without something,” Stabenow said, noting leading economists on both sides of the aisle also have called for enforceable currency language in the TPA.
Lew repeatedly said currency cheating shouldn’t be addressed in the TPA, specifically noting that Japan is no longer manipulating its currency. That led Stabenow to ask: If Japan isn’t going to do so anymore, why not include a strong currency provision for good measure?
Sen. Rob Portman (R-Ohio) — himself a former U.S. Trade Representative — said that he planned to introduce an amendment with Stabenow to ensure currency language is considered in the TPA and “has teeth.”
While promises during trade negotiations are promising, Portman noted that “in five minutes” a country can manipulate its currency and undo years of trade agreement work. That’s why strong, enforceable language is important from the start.
The Senate Finance Committee is expected to resume proceedings at 3 p.m. ET on Thursday, after the draft TPA language has been made public.
More to come…