Obama’s pro-trade allies fight claims about China’s currency
WASHINGTON (AP) — Supporters of President Barack Obama’s trade agenda are battling opponents’ demands to bar China from keeping its currency value artificially low, a way to subsidize exports.
The accusations frustrate and challenge Obama’s allies on several fronts.
First, they say, it’s not clear that China still manipulates its currency. And even if it does, they say, the multinational trade talks now underway are the wrong venues for addressing the matter.
China isn’t a party to the pending 12-nation Trans-Pacific Partnership deal that Obama hopes to send Congress this year. Moreover, U.S. trade advocates say, new international crackdowns on currency manipulation could backfire by drawing unwanted attention to Federal Reserve policies.
Insisting on confronting China’s currency practices could “wreck our trade agenda,” said Tony Fratto, a former Republican White House spokesman and Treasury official now working for pro-trade groups.
Low-valued currency can boost a country’s exports, by making its products more affordable to foreigners. Various groups have accused China, especially, of manipulating its currency over the years.
Some now want to inject the issue into the Pacific Rim trade deal debate, even though China isn’t covered by the pact being negotiated.
There’s widespread debate, however, about how much China benefits, if any, from manipulating its currency.
Last May, economists at the Peterson Institute for International Economics examined The World Bank’s latest global pricing estimates and concluded China’s currency was no longer undervalued. “This estimate is of potential historic significance,” they wrote.
Jerry Jasinowski, an economist and past president of the National Association of Manufacturers, says the United States should have opposed China’s currency policies more aggressively years ago, but not now.
“Whatever advantage China and others gained from currency manipulation is now spent,” he wrote in the Huffington Post. U.S. manufacturing jobs are expanding, Jasinowski wrote, and “foreign currencies are losing value against the dollar.”
Moving aggressively against China’s currency now, he said, “would amount to a cure worse than the disease.”
The currency debate will grow louder in coming weeks as pro-trade lawmakers and advocacy groups push two proposals in Congress.
One, known as “fast track” or “trade promotion authority,” would give Obama a power that recent presidents have enjoyed: to negotiate trade agreements that Congress can ratify or reject, but not amend. Congress can, however, spell out “negotiating objectives” for the talks.
If Congress grants him fast-track powers, Obama is likely to move on the Trans-Pacific Partnership trade deal involving the United States, Japan, Canada, Mexico, Vietnam and seven other nations.
Many labor unions, liberal lawmakers and some environmental groups oppose both trade initiatives. Many business organizations and Republican leaders support them.