Currency manipulation has long been an issue on the U.S. economy and jobs. China’s decision to devalue the Yuan shows the kind of damage that can affect America and so Congress cannot approve until something is done about it. The Teamsters have talked about how the issue is a cancer for the trade deals like the TPP. It will in turn increase America’s trade deficits and force manufacturers to move overseas.
The practice creates an unfair trade advantage that has already cost millions of U.S. jobs and shuttered thousands of U.S. factories. Japan, Singapore and Malaysia, for example, are a part of the trade agreement and have a long history of engaging in currency manipulation. The failure to address currency manipulation and undervaluation has been a major cause of the U.S. trade deficit and manufacturing decline. Yet there is no provision in the TPP to do so.
It is even more surprising when the U.S. already has proof that lack of currency manipulation language is a major failing in modern trade deals. A three-year old U.S. Korea trade agreement is the model that TPP is built around. While supporters say that it would create 70,000 jobs, it instead has led to tens of thousands of lost American jobs and 84% increase in trade deficit with Korea. As the Economic Policy Institute showed, increased trade deficits push jobs out of better-paying industries and at a time where income inequality is a major issue in the U.S., “free trade agreement” is not a thing workers need right now.
Currency manipulation is serious enough that many lawmakers have already aired their concerns on this issue. China’s latest actions highlight the importance of this issue. Currency provisions must be placed in the TPP that could be enforced through trade sanctions. But any additional nations that wish to sign the pact in the future must be approved by the Congress so that China won’t be able to continue its current practices that will leave American workers no way to compete going forward.