AFL-CIO Stresses Need to Tackle Currency as TPP Rules Remain Uncertain
The recent renminbi devaluation illustrates the urgent need to enact the Currency Undervaluation Investigation Act, a currency measure in the Senate’s version of Customs Reauthorization (here), said AFL-CIO Government Affairs Director, William Samuel, in a letter to Congress on Aug. 17. The AFL-CIO has spearheaded efforts to enact currency legislation for years, and in recent days the group of unions chastised lawmakers for inaction following a roughly 4 percent drop in the renminbi value (see 1508130010).
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The currency legislation, which originally surfaced early this Congress as S-433 (here), would allow the Commerce Department to impose countervailing duties on currency manipulators. The White House has forcefully rejected the proposal (see 1505200030). The AFL-CIO letter also praised the House companion legislation (see 1502110021).
Chinese meddling with the renminbi depreciated its value by a total of 4.4 percent since Aug. 11, said the letter. “This most recent devaluation undoes four years of progress toward rebalancing China’s unfair currency advantage and demonstrates that relying on China’s good will regarding its exchange rate is a dangerous and unsustainable folly,” said the letter. Samuel also pressured Congress to insist on enforceable currency in the Trans-Pacific Partnership, another priority for the AFL-CIO. New Zealand Trade Minister Tim Groser said he expects bilateral TPP meetings on the sidelines of the Association of Southeast Asian Nations summit in Kuala Lumpur (see 1508130020).
TPP negotiators likely discussed currency during the most recent ministerial in Maui in late July, and may be preparing to make progress on those talks at the Kuala Lumpur summit, said trade experts. One potential outcome is that TPP parties will agree to a “consultative forum” on currency that runs parallel to TPP and isn’t included in the pact’s legal text, said Jeffrey Schott, a trade economist at the Peterson Institute for International Economics. “There have been discussions about establishing a forum to discuss currency, but that could change; they’re still negotiating,” said Schott. “I don’t anticipate any new obligations with regard to currency or exchange rate policies.”
Scott Miller, an analyst at the Center for Strategic and International Studies, also said a currency outcome wouldn’t include any enforceable commitments. TPP parties may create “some kind of advisory mechanism” to monitor currency trends to determine what specifically qualifies as manipulation, he said. “The parties to TPP are talking about how you monitor currency values and what constitutes unusual movements, such as movements managed by central governments,” said Miller. “These are open questions and figuring them out is something that’s hard to do.” The Office of the U.S. Trade Representative deferred to the Treasury Department, which declined to comment.
Email ITTNews@warren-news.com for a copy of the letter.