Today was "Currency Manipulation Day" on Capitol Hill, declared to call attention to how it works and the damage it does to our economy. In the House there was a "Currency 101" briefing, and in both the House and Senate bipartisan bills were introduced that would address that damage.
House Briefing On Currency Manipulation
On the House side. Reps. Dan "Rock Star" Kildee and Debbie Dingell, both Michigan Democrats, hosted "Introduction to Currency Manipulation: Implications for the Trade Deficit, Jobs, and the Trans Pacific Partnership." A panel of experts representing economists, industry, and labor talked about currency manipulation and its implications for the U.S. trade deficit and jobs: Thea Lee of the AFL-CIO, Josh Bivens of the Economic Policy Institute (EPI), Dean Baker of the Center for Economic and Policy Research (CEPR) and Raphael Goodstein of the American Automotive Policy Council.
Kildee spoke about the lack of rules covering currency manipulation in the upcoming Trans-Pacific Partnership (TPP):
“Countries continue to manipulate their currency to favor their own manufacturers while placing an unfair competitive advantage against American workers. This isn’t ‘free’ trade – it is unfair trade that puts American jobs at risk. Yet the Trans-Pacific Partnership doesn’t address unfair trade practices like currency manipulation that threaten our workers. American workers build the best products in the world and can compete with anyone if they are given a level playing field to compete on. But right now, the deck is stacked against U.S. workers due to unfair trade practices like currency manipulation. Enacting trade deals like TPP without strong enforceable currency manipulation provisions is bad for American workers, bad for businesses, and bad trade policy.”
Last week's EPI report, Currency Manipulation and the 896,600 U.S. Jobs Lost Due to the U.S.-Japan Trade Deficit found that currency manipulation by Japan has cost our country ... well the title says how many. From the report:
"Currency manipulation is the most important cause of the large and growing U.S. trade deficit with Japan. In the past two years, Japan has driven down the value of the yen primarily through large purchases of foreign assets, and also by announcing its intention to reduce the yen’s value."
Last year EPI looked at the cost to our economy from currency manipulation. Their report concluded that fixing this problem could bring back up to 5.8 million jobs, reduce the U.S. trade deficit up to $500 billion and increase annual U.S. GDP by up to $720 billion (between 2.0 percent and 4.9 percent).
Bipartisan House Bill Addresses Currency Manipulation
Representatives Sander Levin (D-Mich.), the top Democrat on the House Ways and Means Committee, Tim Murphy (R-Pa.), Tim Ryan (D-Ohio) and Mo Brooks (R-Ala.) introduced "The Currency Exchange Rate Oversight Reform Act of 2015." This bill is very similar to bills that have passed the House or Senate in previous years but did not make it into law.
Senate Bill Also Addresses Currency Manipulation
Senators Sherrod Brown (D-Ohio), Jeff Sessions (R-Ala.), Charles E. Schumer (D-N.Y.), Lindsey Graham (R-S.C.) and Debbie Stabenow (D-Mich.) unveiled "The Currency Undervaluation Investigation Act." The bill "would use U.S. trade law to counter the economic harm to U.S. manufacturers caused by currency manipulation, and provide consequences for countries that fail to adopt appropriate policies to eliminate currency misalignment."
The senators are concerned about the lack of enforcement of existing currency laws by the Obama administration. This bill would require the administration to investigate and then take steps against manipulators, including setting countervailing subsidies. The senators are also concerned that the administration is not addressing currency manipulation in the upcoming Trans-Pacific Partnership trade agreement.
The following statements were in a press release from Brown's office,
“Instead of addressing our growing trade deficit, we’re pursuing trade deals with countries that manipulate their currency,” Brown said. “Foreign companies who don’t play by the rules are actively trying to undermine the effectiveness of our trade laws. It’s time to level the playing field for American manufacturers and workers – the most competitive in the world. This bipartisan bill would create jobs and ensure American business can compete – at no cost to taxpayers.”
“America has always been a trading nation, but a trade relationship is like a contract: both parties must agree and play by the same set of rules,” Sessions said. “When one of our trading partners harms American workers by skirting the rules, we have an obligation to respond in their defense. I hope the Senate will again bring up this commonsense legislation for a vote, and I’m confident it will again pass with strong bipartisan support.”
Scott Paul, President of the Alliance for American Manufacturing, issued a statement saying,
“Manufacturing has still only recovered a fraction of the jobs we lost during the Great Recession. This bipartisan legislation will help to bring more manufacturing jobs back to our shores.
“While the Obama administration wants to pass the buck on currency manipulation, we know that only constant, sustained pressure stops trade cheating and currency manipulation in its tracks. That’s why Congress should pass this bill now. We commend the sponsors of the bill and look forward to working with them to see it become law.”