Last week, China, the world’s second largest economy, devalued its currency by about 4% against the dollar. Vietnam—a party to the ongoing Trans-Pacific Partnership (TPP) negotiations—followed suit. This devaluation makes it tougher to sell U.S. goods on the world market—by making “Made in America” goods relatively more expensive and Vietnamese and Chinese goods relatively cheaper.
The world’s currencies can and should go up and down in value to reflect economic conditions in each country. But not all countries play by the rules. Some—like China—purposely control the exchange rates of their currencies to gain a trade advantage against other countries. While such moves may help to create jobs in China, they do so by disadvantaging workers elsewhere—including killing millions of jobs in the United States.
Such gaming the system is out of step with international norms. The International Monetary Fund and the World Trade Organization even have rules against it. But neither organization has made an effort to enforce those rules.
The United States could act unilaterally, treating currency manipulation as an illegal trade subsidy and applying tariffs on Chinese goods to level the playing field. But each president, from Bill Clinton to George W. Bush to Barack Obama, has failed to do so.
Now the United States is preparing to sign the biggest regional trade deal in history—the TPP. It could choose to put clear, enforceable rules against currency manipulation in the TPP. The AFL-CIO, U.S.-based manufacturers and other organizations have been urging such rules for more than five years—to no avail. The administration’s opposition to clear currency rules in the TPP will benefit U.S. companies that produce in China and Vietnam and sell back to the United States. And it will hurt U.S. working families and U.S. producers.
Last week’s moves by China make it imperative for Congress to act as soon as it returns from recess. It must pass a currency bill to ensure future administrations can act unilaterally and swiftly to address currency cheating—and it must say no new trade deals without real and effective currency rules. Period. We can’t afford to lose more jobs because Congress and the administration fail to act on currency.
Get involved in the fight for a fair trade deal that works for working people. Text TPP to 235246.
Check out my recent appearance on VOA News for more on China and currency manipulation: