FOR IMMEDIATE RELEASE
September 30, 2015
Contact: Andrew Jerome, 202-314-3106
WASHINGTON (September 30, 2015) – Congress and the administration need to insist that enforceable language against currency manipulation be included in all trade deals moving forward, including the Trans-Pacific Partnership (TPP), argues National Farmers Union President Roger Johnson in a Huffington Post guest column.
“Currency manipulation has become our trade competitors’ favorite maneuver for skirting massive trade deals as soon as they sign them, and it’s about to happen again,” notes Johnson. “Before these trade deals become effective, some of our trading partners devalue their currency, immediately reducing the cost of their goods to us and everyone else, and increasing the cost of our goods to them.”
Johnson explains that while politicians on both sides of the aisle rally behind trade agreements because of claims that they will reduce or remove tariffs and export subsidies, large regional pacts, like the TPP, are also about setting fair rules for trade.
A significant portion of the TPP, for example, pertains to non-tariff barriers and includes chapters on the environment, labor rights and intellectual property. “Currency manipulation should be included as its own chapter since it is one of the most fundamental non-tariff barriers to trade. Unfortunately for the TPP, that is not the case,” he says.
Johnson notes that as a result of currency manipulation in past trade deals, it’s nearly impossible for the U.S. to get a fair shake in these deals. “In fact, if you look at the data from trade deals we’ve already entered, the strongest correlation you can make is that the more trade deals we sign, the more jobs we lose and the higher our trade deficit grows.”
Johnson points out that the notion of currency manipulation is not speculation. “In August, Vietnam – one of the participating countries in TPP – devalued its currency in response to a major devaluation by China earlier this summer,” he said, adding that Malaysia and Singapore have also intervened in their currencies by increasing reserves by an unprecedented amount. “There’s nothing stopping others in the agreement from manipulating their currencies as well.”
A recent report by the International Monetary Fund demonstrated the power of devaluation of a currency, showing a 10 percent fall in the value of a nation’s currency can increase exports by an average of 1.5 percent of GDP. “At that point, the playing field is no longer level, and trade is not free or fair,” said Johnson.
“The TPP agreement must include a chapter on currency manipulation that establishes enforceable rules and procedures to address currency manipulation. If it does not, TPP will not be worth the paper it is written on.”
National Farmers Union has been working since 1902 to protect and enhance the economic well-being and quality of life for family farmers, ranchers and rural communities through advocating grassroots-driven policy positions adopted by its membership.