The issue – or non-issue – de jour among parties to the free trade debate is currency manipulation by America’s potential trading partners.
The U.S. auto industry and its defenders in Congress claim that Japan and some of the other countries negotiating the Trans-Pacific Partnership, or TPP, have a history of devaluing their currencies to the detriment of U.S. exports.
They say U.S. negotiators should insist on inserting punitive language into the TPP text to allow the United States to retaliate against currency manipulation. Senators Rob Portman, R-Ohio, and Debbie Stabenow, D-Mich., introduced legislation today to require that very thing. They represent the two largest auto-producing states.
Three Democratic House members from Michigan, Dan Kildee, Debbie Dingell and David Trott, piled on with a press release that said currency manipulation was the “mother of all trade barriers,” and “could mean the loss of tens of thousands of American jobs” if it’s not addressed in the TPP.
Simply put, currency manipulation is the devaluation of one’s own currency, which makes exports cheaper and imports more expensive.
What you need to know about it is that it’s negligible, at least with regard to the TPP.
“Critics say currency manipulation is a growing problem. In fact, it’s rapidly diminishing,” said Tony Fratto, a trade attorney in Washington. He spoke at a currency manipulation event put on today by the Washington InternationalTrade Association.
The Detroit Three – Ford Motor, General Motors and Chrysler – are primarily concerned about currency manipulation by Japan. But Japan has not materially intervened in the yen since the 1990s, according to the U.S. Treasury Department.
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