Two top Democrats said Wednesday that without currency manipulation provisions, the White House’s ambitious trade agenda has little chance of gaining traction in Congress.
Sen. Sherrod BrownSherrod Campbell BrownWhen the Fed plays follow the leader, it steers us all toward inflation Which proposals will survive in the Democrats' spending plan? Senate Democrats call for diversity among new Federal Reserve Bank presidents MORE (Ohio) and Rep. Sandy Levin (Mich.) told reporters that a new report from the Economic Policy Institute (EPI) should restart the conversation about the need to include a framework for determining offenders and punishing countries that deliberately adjust their exchange rates for their own gain.
"There’s been a resistance toward placing currency manipulation in trade agreements, and that’s a mistake,” Levin said.
Trade deals "can’t pass Congress without currency" provisions, he said.
Brown and Levin agreed that currency manipulation has to rise to the top of the U.S. agenda even as negotiators of the 12-nation Trans-Pacific Partnership (TPP) struggled to find common ground on nearly a dozen other major issues.
Brown said that U.S. Trade Representative Michael FromanMichael B.G. FromanOn The Money: Sanders unveils plan to wipe .6T in student debt | How Sanders plan plays in rivalry with Warren | Treasury watchdog to probe delay of Harriet Tubman bills | Trump says Fed 'blew it' on rate decision Democrats give Trump trade chief high marks US trade rep spent nearly M to furnish offices: report MORE has been willing to sit down regularly to discuss the currency issue but that neither Froman nor the Obama administration has been very responsive, so far, to the idea of bringing it up in the talks.
"The trade agenda is not moving until currency is part of it," Brown said.
Froman has said he understands the seriousness of the issue and has said that the Treasury Department takes the lead on those issues.
That response prompted Levin to call for greater involvement by the Treasury to determine the best way to approach the issue.
Bipartisan majorities on both sides of the Capitol have written to President Obama urging U.S. trade officials to add currency manipulation to their negotiations or face the possibility of watching their trade agenda tank.
The Economic Policy Institute’s report shows what Brown, Levin and many others on an off Capitol Hill have been arguing for years: millions of U.S. job losses and widening trade deficits.
Notable aspects of the EPI report found that eliminating currency manipulation would reduce the U.S. trade deficit by $200 billion in three years to upward of $500 billion, depending on the approach.
That reduction could boost economic growth between 2 and 4.9 percent and create 2.3 million to 5.8 million jobs.
"As we're negotiating trade agreements it has become increasingly clearly it has to be a provision in trade agreements," Levin said.
Addressing currency manipulation in the TPP would "send a very clear message" to nations that use the policy in an attempt to boost their economies.
Levin said that has been made more important because Japan is part of the TPP deal and Tokyo "has used the policy in the past and we want to make sure it doesn't use it in the future."
A trade promotion authority bill, which would help smooth the passage of trade deals in Congress, was introduced in January by former Sen. Max Baucus, who is now the U.S. ambassador to China, and includes some direction on currency provisions.
But Brown said that bill isn't going anywhere and that lawmakers will eventually write a new bill but they need legislative language from the White House before proceeding.
Many Democrats have expressed opposition to the fast-track bill produced by Baucus and have said they want to examine what is needed to allay their concerns.
China, which has long been the focus for lawmakers and some industry groups, isn't part of the TPP talks but remains a top priority for any policy that would push Beijing to let the yuan rise in value.
There is new concern the Chinese government is allowing the value of the yuan to fall again as a way to boost its economic growth and lower the costs for its exports, further pushing the issue to the forefront.