With the finalization of TPP, all the partners face an uphill task of passing the agreement in their respective structures. While countries like Vietnam, Malaysia etc. will have no issues ratifying the agreement, the US faces a daunting task. Jeff Spross in his article “The Trans-Pacific Partnership’s biggest failure” published in The Week, dtd. 11/6/2015 (http://theweek.com/articles/587248/transpacific-partnerships-biggest-failure) notes that the TPP agreement does not offer any protection against currency manipulation. The author is concerned that as a result, devaluation of the currency of partner country could potentially lead to trade imbalances and changes in trading volume. The rising value of dollar against other currencies has led to a huge trade imbalance for US and could be a potential boon to Vietnam and Singapore. The article points out that US has indeed had this issue in the past with Japan, Malaysia and Singapore, all partners in TPP. Does this represent not only a risk for US, but also all the other countries? And if this scenario becomes true, what effect will it have on the trade in the future? Considering the impact of currency manipulation in China on the world, how would a currency manipulation affect non TPP countries?
In a recent Reuters online article, “Japan says TPP is not a place to negotiate currencies” http://www.reuters.com/article/2015/07/31/japan-economy-aso-idUSL3N10B06Y20150731, dated July 31st, 2015, Japanese Finance Minister Taro Aso made it clear that there would be no talks of manipulating currency rates in the TPP negotiations. A U.S. proposal to discuss currency questions has been proposed and endorsed by several nations, but Japanese officials say that these issues are not appropriate for the ongoing TPP negotiations and have already been dealt with during the IMF, G7, and G20 summits.