Levin Continues to Pressure Currency Rules in TPP
China, Japan, South Korea and other countries continue to manipulate their currencies on a consistent basis, and the “quiet diplomacy” approach to pressuring those countries to allow their currencies to reflect market value has so far failed, said House Ways and Means Committee Ranking Member Sandy Levin, D-Mich., in an April 13 blog post (here). The Treasury Department declined to label any country a currency manipulator in its most recent semi-annual report to Congress on currency (here). The report, nonetheless, said the Chinese renmenbi (RMB) “remains significantly undervalued.”
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Levin again called on U.S. trade negotiators to require currency rules in Trans-Pacific Partnership talks, despite regular rejection of that approach from Obama administration officials (see 1502250015). Japan is a party to the TPP talks, and a key Japanese negotiator recently said currency would sink a final deal (see 1503050011). Levin said diplomacy hasn’t deterred Japan from manipulating its currency over recent years.
Levin and other lawmakers in the House and Senate introduced currency manipulation legislation in February (see 1502120014). But Levin has said such legislation won’t eliminate the need for TPP currency rules. The legislation would allow the Commerce Department to impose countervailing duties on imports from currency manipulators. Levin has repeatedly argued currency rules in TPP won’t put U.S. monetary policy at risk. But Republicans on Capitol Hill, including Ways and Means Chairman Paul Ryan, R-Wis., widely reject currency legislation and TPP rules (see 1502130023).
Undervalued currencies are costing U.S. jobs and suppressing wages, Levin said in the blog. He emphasized the need for stronger global rules on the subject and said the World Trade Organization would potentially allow for disputes over manipulation. “While a particular country might not be manipulating its currency at the moment, the international economic order lacks a rule with an enforcement mechanism that deters currency manipulation for occurring in the future,” said Levin. “The TPP should provide that rule and enforcement mechanism.” Levin dismissed arguments that currency rules are a “poison pill” in trade agreements. The U.S. now includes labor and environment rules in FTAs, as well as minimum standards for investment treatment, despite previous skepticism over inclusion of those rules.