Senate rejects automaker bid on currency manipulation

David Shepardson
Detroit News Washington Bureau

Washington — Detroit's Big Three automakers lost a big battle late Wednesday, when the Senate Finance Committee voted down an amendment that would have required the Obama administration to seek enforceable currency manipulation standards in a free trade deal.

The committee — after more than five hours of considering amendments — approved a bill by a 20-6 vote that would give the Obama administration "fast track" authority to negotiate a final trade deal that accounts for 40 percent of the world's economy. The House Ways and Means Committee will consider the bill on Thursday — and it comes days before Japanese Prime Minister Shinzo Abe comes to Washington next week.

The vote came after the Obama administration called the currency manipulation amendment a "poison pill" that could have derailed 12-nation free trade talks with Japan and other countries — and despite heavy lobbying by U.S. automakers, especially Ford Motor Co., which argues that without the measure Japanese automakers may get a big boost from unfair currency intervention.

Still the battle isn't over. Advocates of a tougher line on currency will make a push on the Senate floor -- and another push when a final trade deal comes before Congress. "It's clear there is broad, bipartisan agreement that currency manipulation must be addressed. Without enforcement against currency manipulators, the status quo prevails. The status quo isn't working," Ford spokeswoman Christin Baker said.

Advocates had sought tougher language in fast track legislation that would have require the Obama administration to seek enforceable currency manipulation rules as they negotiate a 12-nation free-trade agreement called the Trans-Pacific Partnership. The fast track bill allows the Obama administration to get an up or down vote from Congress on a final deal without amendments.

Sens. Rob Portman, R-Ohio; Stabenow; Richard Burr, R-N.C.; Sherrod Brown, D-Ohio; and Robert Casey, D-Pa., are pushing the change. Detroit's Big Three automakers are heavily lobbying in favor of the Portman-Stabenow measure. Ford took out full-page ads in Michigan and Ohio newspapers in support of it.

But earlier advocates of cracking down on currency manipulation won a separate battle that would require import taxes on countries that acted improperly. The action is aimed at China.

Sen. Orrin Hatch, R-Utah, said if the amendment had passed it would have derailed the bill. "If this amendment passes, you can kill (the 12-nation free trade deal goodbye," he said.

But Sen. Debbie Stabenow, D-Lansing, said that if including currency meant that a free trade might die it was worth the price. "Then it shouldn't go through," Stabenow said. "Adding currency language that is enforceable will actually pick up votes."

The panel did agree to proposals pushed by Stabenow and others to create a position of chief manufacturing negotiator within the U.S. Trade Representative's Office and an interagency trade enforcement center that has worked on trade enforcement cases on autos and agriculture. But they voted down a separate currency proposal from Stabenow and an amendment from Sen. Brown that would have required a specific review of the impact of trade deals on the auto and steel sectors.

Last week, key Senate leaders and the White House reached a deal that would allow for a fast-track vote on free trade deals through a measure called Trade Promotion Authority, or TPA, including Sen. Ron Wyden, the Oregon Democrat who is the ranking member of the Finance Commitee. He said currency manipulation has been the biggest trade issue faced by the committee.

Also on Wednesday, House Democratic leaders said they will support an alternative fast-track bill that includes tougher currency manipulation measures sponsored by Rep. Sander Levin, D-Royal Oak, the top ranking House Democrat on trade issues. A group of eight former top U.S. trade ambassadors and many former Treasury secretaries wrote letters backing the Obama administration.

The House Ways and Means Committee is set to vote on fast-track legislation on Thursday.

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. Japanese Prime Minister Shinzo Abe is due in Washington next week and negotiators want a deal by then.

American automakers fear if Japan intervenes to weaken its currency, its automakers eventually will be able to dramatically undercut them, especially when U.S. tariffs are phased out — 25 percent on light trucks and 2.5 percent on cars. Automakers want the tariffs kept in place for at least 25 years or more. And China could seek to enter the free-trade agreement under the same rules down the road.

But advocates won a smaller battle.

The panel voted 18-8 over the objections of the Obama administration and the panel's top Republican to allow for new trade sanctions to be imposed if countries manipulate their currency to get an unfair advantage.

"This is to show China that we are not messing around," said Sen. Charles Schumer, D-N.Y., who introduced an amendment that would allow for new import taxes to be imposed if countries manipulated their currency. "Something should be done about it. The appropriate time is now."

There is growing frustration in Congress about efforts to devalue currency. Democrats especially have said it has cost millions of U.S. jobs especially in manufacturing as thousands of factories closed over the last decade and jobs moved abroad.

Schumer said diplomatic efforts have been tried for a decade and hadn't worked. "It's time to do something that might actually solve this problem," he said.

Added Sen. Bob Casey, D-Pa.: "When China cheats, we lose jobs."

Hatch said the measure might violate U.S. obligations under trade rules and could spark a "trade war." He had sought its defeat. Hatch doesn't dispute that currency manipulation is a problem, but questioned whether this is the right action and vowed to hold more hearings on China.

Sen. Debbie Stabenow, D-Lansing, said China wasn't moving fast enough. She also wanted to send a message to Japan, which has intervened to reduce the value of its currency in the past. "We want Japan to know that it is not OK to manipulate your currency. It costs us millions of jobs," Stabenow said.

Stabenow said a "good chunk" of why Chinese goods sold in the United States are lower-priced "is because they cheat."