U.S. Treasury warns Congress: Currency push for trade deals will fail

Reuters News
Posted: Apr 21, 2015 12:52 PM

By Krista Hughes and Jason Lange

WASHINGTON (Reuters) - The U.S. Treasury on Tuesday warned lawmakers against insisting on sanctions against currency cheating in trade deals and said Pacific trading partners made clear they oppose such rules.

Senators plan to push for tough rules to stop trading partners deliberately weakening their currencies when amendments are considered on Wednesday to a bill to streamline the passage of trade deals through Congress.

But U.S. Treasury Secretary Jack Lew said the administration had consulted with Trans-Pacific Partnership members and such rules had no support from the other 11 countries in the pact, which is nearing completion.

"All of the partners consulted have made clear that they will not support the introduction of enforceable currency provisions in the context of trade agreements, and specifically, the TPP," Lew wrote in a letter to senior lawmakers.

An amendment drafted by Republican Rob Portman and Democrat Debbie Stabenow would beef up rules against currency manipulation, which currently allow the administration discretion on how to get trading partners to toe the line.

Stabenow, whose home state of Michigan is a hub for U.S. auto manufacturers worried about more competition from TPP partner Japan, said she would use the Senate Finance Committee's debate on the bill on Wednesday to make currency rules enforceable.

"Probably the votes are there, but certainly without strong currency enforcement, it will not have my vote," she said.

Trade promotion authority, or TPA, allows Congress to set negotiating objectives for trade in exchange for a yes-or-no vote. That gives trading partners certainty deals will not be picked apart.

Committee Chairman Orrin Hatch, a Republican, said if the TPA bill passed the committee on Wednesday, it could go for a full Senate vote "within the next month."

But Senate Democratic leader Harry Reid said he was concerned the legislation, which is opposed by many Democrats, was moving too quickly.

U.S. Chamber of Commerce President Tom Donohue urged senators to support the bill. "TPA is critical because economic growth and job creation at home depend on our ability to sell American goods and services overseas," he said.

But the head of the AFL-CIO union group said trade agreements have led to job losses and that labor protections in the TPP, which can later be extended to include other countries, fell short.

"(TPP) could be the last trade agreement we negotiate, so it's especially crucial that we get the terms right," said AFL-CIO President Richard Trumka.

(Reporting by Krista Hughes; Additional reporting by Susan Cornwell, Richard Cowan, David Lawder, Jason Lange and Amanda Becker; Editing by Dan Grebler)