New report says US-Japan trade deficit shows need for currency provisions in TPP

Japan’s currency policies cost U.S. workers 896,000 jobs in 2013, making it imperative that an Asia-Pacific trade deal includes currency manipulation provisions, a new report said on Wednesday.

Tokyo’s currency manipulation was the biggest cause in the U.S.-Japan goods trade deficit of $78.3 billion in 2013, according to the report by Robert Scott, the Economic Policy Institute’s director of trade and manufacturing policy research.


Scott argues that because of the growing deficit, the 12-nation Trans-Pacific Partnership (TPP) should include measures to address currency manipulation by Japan and other nations.

The new report comes out amid a growing chorus of calls from congressional lawmakers on Capitol Hill to add provisions to the TPP that would provide a framework for determining and enforcing currency manipulation in countries aiming to gain a global trading advantage.

Sen. Debbie StabenowDeborah (Debbie) Ann StabenowRepublican John James concedes in Michigan Senate race Lobbying world Senate Democrats reelect Schumer as leader by acclamation  MORE (D-Mich.), a member of the Senate Finance Committee, is one of dozens of lawmakers pressing the Obama administration to push for currency language in the TPP, a deal that includes Japan.

The issue is a bipartisan one with Republicans and Democrats in both chambers arguing that some countries are giving themselves trade advantages at the expense of U.S. jobs.

Stabenow told reporters on Wednesday that she has talked recently and repeatedly to President Obama, Vice President Joe Biden, Treasury Secretary Jack Lew and U.S. Trade Representative Michael Froman about combating the problem through provisions in future trade deals.

Stabenow said her state’s auto manufacturing industry continues to pay the price because some countries undervalue their currency and hurt U.S. businesses.

"When you talk about the auto industry and manufacturing I’m really concerned about moving forward with a trade deal that doesn’t give our workers a shot," she said.

The EPI report, which focuses mainly the effect on the auto and auto parts industry, shows that Stabenow’s state has been hit the hardest by changing currency values in Japan.

She also said that including the language in the trade promotion authority (TPA) bill isn't enough and that provisions must be in the TPP, too. 

But last week the president and U.S. Trade Representative Michael Froman said currency provisions weren't expected to be rolled into the TPP, which is getting close to completion.

Obama told House Democrats at their retreat in Philadelphia last week that adding currency provisions into the TPP is too complicated and not workable, a lawmaker told The Hill. 

Froman has deferred the issue to Lew at Treasury.

Stabenow said she thinks there may be a proposal coming forward from the White House although she isn't aware of anything specific yet.

She said those who want to see trade promotion authority and TPP get through Congress are going to have to consider currency manipulation into the equation.

The United States and Japan are working on a parallel track to reach a deal on greater market access for autos and agriculture.

The EPI report said that besides Japan, Malaysia and Singapore, also in the TPP, also have exhibited currency problems.

The report argues that the United States has a large and growing trade deficit with Japan and the 10 other countries in the TPP, which increased to an estimated $261.7 billion in 2014 from $110.3 billion in 1997.

Each of the 50 states and the District of Columbia lost jobs due to the U.S. trade deficit with Japan in 2013, the report said.

Overall, eliminating currency manipulation in about 20 developing and developed countries, including Japan, could reduce the U.S. trade deficit by between $200 billion and $500 billion each year and create between 2.3 million and 5.8 million U.S. jobs, the report said.