Senators urge currency manipulation crackdown

David Shepardson
Detroit News Washington Bureau

Washington – — The battle over a proposed free-trade agreement is heating up as a group of influential senators on Tuesday will unveil legislation seeking to crack down on currency manipulation.

U.S. automakers, the United Auto Workers and the AFL-CIO have made the issue of currency manipulation a top priority as they seek to convince the Obama administration to include currency provisions in the 12-nation Trans-Pacific Partnership agreement. They also hope to influence legislation expected in coming weeks that would give the administration "fast track authority" to negotiate a free trade deal and get an up or down vote from Congress.

A bipartisan group of senators are introducing legislation that they say will reform and enhance oversight of currency exchange rates. The senators include Debbie Stabenow, D-Lansing, and Sherrod Brown, D-Ohio. "There is strong, strong support in the Senate for real currency provisions ... for real enforceable currency standards," Brown said at a hearing last week.

The Currency Exchange Rate Oversight Reform Act of 2015 would use U.S. trade law "to counter the economic harm to U.S. manufacturers caused by currency manipulation, and provide consequences for countries that fail to adopt appropriate policies to eliminate currency misalignment," the members said in a statement.

The senators cited a study from the Peterson Institute that argues interventions in currency markets by foreign governments have cost U.S. workers as many as 5 million jobs over the last decade. By lowering the value of currency, it makes foreign exports to the United States cheaper and U.S. exports more expensive in dollar terms.

Rep. Sander Levin, D-Royal Oak, said in an op-ed published last week that "currency manipulation by foreign governments has resulted in an increase in unfairly traded imports into the United States and has made it more difficult for U.S. exporters to compete in foreign markets."

Automakers have been pushing for at least three years to convince the Obama administration to include provisions in the agreement that would bar the countries from currency manipulation, but the administration has repeatedly shown no interest in doing so, arguing such issues are better addressed by global forums such as the World Trade Organization.

The U.S., Japan, Mexico, Canada and eight other nations have been negotiating the Trans-Pacific Partnership that would create a free-trade zone comprising 40 percent of the world's economy for more than four years. Australia, Brunei, Chile, New Zealand, Malaysia, Peru, Singapore and Vietnam are part of the talks. The countries hope to wrap up a deal in the coming months, while Congress may consider fast-track legislation in March.

The U.S. auto industry worries a deal will be reached that doesn't do enough to open the Japanese auto sector to American products. Japan has historically imported very few foreign automobiles, but the number has been rising significantly in recent years — especially among European vehicles. The auto sector accounts for more than 70 percent of the U.S. trade deficit with Japan.

Schumer wants "rigorous controls on currency" and said it would be a "really wrong move" not to include currency in talks with Japan.

U.S. exports of autos, auto parts and other vehicles totaled $2.2 billion in 2014, compared to $50.4 billion in Japanese auto sector exports to the United States in 2014. The U.S. exports were about the same in 2013, while Japanese exports totaled $54.8 billion in 2013 as some Japanese automakers have shifted some production to the United States.

Treasury Secretary Jacob Lew argued at a congressional hearing last week that the administration takes strong action against currency manipulation, but again showed no willingness to address the issue in trade talks. "When we push back there is a response," he said, saying the administration has been "quite successful" in opposing efforts by countries to manipulate their currency. But he said the administration wants to work with Congress.

The administration argues a trade deal will boost exports and add more jobs. "Exports are the key to our economic future," Lew said. "We want American companies to have access" to growing markets to sell more vehicles.

Stabenow disagreed that the administration has been tough enough on currency.

"These actions have not kept pace with increasing adverse impacts of currency manipulation on U.S. business," she said last week, complaining that the Japanese auto market remains largely closed to U.S. vehicle imports.

DShepardson@detroitnews.com