Senators Pressure USTR, Treasury to Implement Currency Disciplines in FTAs
A bipartisan group of 60 Senators sent a letter to Secretary of the Treasury Jack Lew and U.S. Trade Representative Michael Froman Sept. 23 to encourage U.S. implementation of robust currency manipulation disciplines in future free trade agreements (FTAs). The Senators endorsed the U.S. push to conclude Trans-Pacific Partnership negotiations but emphasized the impact currency manipulation has on U.S. employment (see 13091014).
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Currency "is as important to trade outcomes as is the quality of the goods or services traded,” read the letter. “Currency manipulation can negate or greatly reduce the benefits of a free trade agreement and may have a devastating impact on American companies and workers.”
Currency manipulation has cost the U.S. between one and five million jobs and may squander benefits of FTAs, said the letter circulated by Senators Lindsay Graham, R-S.C., and Debbie Stabenow, D-Mich., citing a Peterson Institute for International Economics study. The House sent a similar letter in June that garnered 230 signatures, also claiming a clear majority (see 13060717). House Ways and Means Committee Ranking Member Sander Levin, D-Mich., continues to champion the need to address currency manipulation, mostly recently targeting TPP participant Japan in an action plan (see 13072414).
“This is an issue that should unite many of us in Congress and has united many of us in Congress,” said Jason Kearns, chief trade counsel, House Ways and Means Committee (Democratic), at a Sept. 20 CATO Institute panel (see 13092309). “The technicalities here are relatively easy to do. I fully recognized that getting countries … that some have recognized as currency manipulators in the past to agree to do something might not be so easy.”
The TPP currency manipulation qualifications should replicate those of the International Monetary Fund, said Kearns. The most egregious currency manipulation practices are protracted, large scale intervention in currency markets and hoarding of foreign exchange reserves, he added. The IMF lacks an enforcement mechanism, Kearns said, while pressing the need for such a mechanism in TPP.
An administration official responded to the Senate letter with support. "Continuing to move major economies toward market-determined exchange rates and promoting a level-playing field for American workers and firms remains a top priority.," said the official. "The Treasury Department is leading ongoing efforts to address currency issues in multilateral and bilateral fora."