A Trade Bill to Help Curb Currency Manipulation

Bipartisan TPA Renewal Bill Addresses 21st Century Challenges of Global Trade

With a robust trade agenda about to move through Congress, the issue of currency manipulation and its adverse impact on American job creators and workers has emerged as an issue.

Members, thought leaders, and experts across the political spectrum agree that mercantilist trade practices, like currency manipulation, deserve serious attention and must be addressed in a strong and responsible way.

That’s why bipartisan, bicameral legislation to renew Trade Promotion Authority (TPA), S. 995, the Bipartisan Congressional Trade Priorities and Accountability Act of 2015 for the first time includes a negotiating objective on currency to help curb the practice of persistently undervalued currencies by foreign countries.

A group of 10 former U.S. Treasury Secretaries from both Republican and Democratic administrations agree with this approach.

In a letter to Congress yesterday, they wrote, “The United States should continue to use multilateral and international mechanisms and diplomacy to prevent unfair currency manipulation. While the desirability of including currency manipulation in trade agreements can be debated, as a practical matter, it is impossible to get agreement on provisions that subject currency manipulation to trade sanctions in a manner that both the United States and other countries would find acceptable. Because we believe an agreement is strongly in the economic and security interests of the United States, we respectfully urge Congress to approve Trade Promotion Authority.”

Bottom line, the Bipartisan Congressional Trade Priorities and Accountability Act of 2015 addresses currency manipulation in way that won’t threaten the health of the America’s economy or constrain America’s ability to respond to changing economic circumstances. Nor will it raise the likelihood of trade wars or currency wars, where countries engage in competitive sanctioning and central banks engage in competitive devaluations.

Here’s what the bill does:

Elevates Currency to a Principal Negotiating Objective:

For the first time, TPA includes a principal negotiating objective addressing currency manipulation. Previously, 2002 TPA addressed currency issues in the “promotion of certain priorities” section.
If the Administration fails to make progress in achieving the purposes, policies, priorities, and objectives of TPA, the trade agreement is subject to a procedural disapproval resolution.

Strong Standards:

TPA sets a strong objective for trade negotiators, requiring that “parties to a trade agreement with the United States avoid manipulating exchange rates in order to prevent effective balance of payments adjustment or to gain an unfair competitive advantage over other parties to the agreement.”
This standard reflects existing IMF obligations and reinforces U.S. efforts in other forums, such as the G7 and G20.

Enforceable Rules:

TPA provides the Administration with tools such as “cooperative mechanisms, enforceable rules, reporting, monitoring, transparency, or other means, as appropriate” to address currency manipulation.
This approach is fully supported by the Administration, including the Treasury Department.

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