Two senior congressional lawmakers said Wednesday that an Asia-Pacific trade deal won’t get through Congress without currency manipulation provisions.
Sen. Lindsey Graham (R-S.C.) and Rep. Sandy Levin (D-Mich.) each said they would oppose any Trans-Pacific Partnership (TPP) agreement that failed to include a framework to punish countries that lower the value of their currency for trade advantages and economic gain.
“I would say ‘no’ to TPP,” Graham said during a roundtable discussion on Wednesday on Capitol Hill.
Levin argued that while there are still many more issues yet to be resolved before negotiators can wrap up a TPP deal, the currency issue clearly needs to be resolved.
“It must be part of it, it’s the time to do it.”
Graham emphasized that the currency issue is the place to “take a stand and fight” because the problem is damaging the U.S. economy and costing millions of jobs.
They argued that this may be the last chance for the United States to push for such provisions in trade deals.
To make their point clear, Graham and Levin brought together a broad coalition of labor, academic, manufacturing and business representatives, all who came to Capitol Hill on Wednesday to discuss the biggest question dominating the trade landscape — what will it take to get the Obama administration get onboard.
President Obama and U.S. Trade Representative Michael Froman say the TPP is in the “end game” and should be wrapped up by the end of the year.
But Levin warned that there is no end game for TPP without the currency provisions.
In September, 60 senators and 230 House members each sent letters to Obama and Treasury Secretary Jack Lew urging them to talk to the other 11 TPP nations about the issue.
Up to this point, the subject hasn’t been broached after three years of discussions.
And now, lawmakers are saying there is no moving forward without the provisions and that the fate of any trade deals, including the U.S.-European Union agreement, could hinge on those discussions.
Graham said he and Sen. Debbie Stabenow (D-Mich.), who led the charge on the Senate letter, are willing to go the distance on ensuring that the issue is finally done after years of putting it off.
Graham and Levin say that currency manipulation is a long-time problem that has been ignored by one White House after the next but now has hit critical mass.
Lew is touring through Asia this week — stopping in four of the 12 countries that are part of TPP negotiations — to urge government leaders to make the necessary adjustments to their currency.
While Lew hasn’t signaled any changes to the administration’s policies on currency, supporters argue that his trip may allow him to glean the information needed to make a shift toward a willingness to include provisions in all trade deals.
In fact, Graham said U.S. trade officials must be willing to kill negotiations over the trade deal to convince other nations of the necessity of the provisions.
In a separate statement, House Ways and Means Committee Chairman Dave Camp (R-Mich.) said “it’s time to have a serious discussion about the pros and cons of including currency provisions in trade agreements — and what those provisions might look like.”
“If the administration continues to delay its engagement on this politically and economically important issue, it will undermine support for TPP and could delay our ability to conclude TPP.”
Fred Bergsten, founding director for the Peterson Institute for International Economics, said without the currency provisions the trade deal is a “waste of time.”
He outlined a framework that would determine which countries are manipulating their currencies by examining increases in their currency reserves and account surpluses. If they are the could lose the benefits of the trade deal or, if necessary be fined for face import surcharges.
Bergsten said while international law technically prohibits currency manipulation those rules clearly aren’t enough to stop the practice.
Levin said the rest of the proposed framework is still under development.
Morris Goldstein, senior fellow the Peterson Institute for International Economics, said that any provisions must be clear in that any nation signing onto the deal would understand that they would be punished for deliberately lowering the value of their currency for economic gain.
Matt Blunt, head of the American Automotive Policy Council, called currency manipulation the “greatest impediment to real free trade.”
Thea Lee, chief of staff with the AFL-CIO, said she wanted to “reiterate how important we think it is” and that “if we don’t get it right we may not have another chance.”