Soapbox

Trade rigged if there’s currency cheating

A man uses a mobile phone in front of an advertisement of a Japanese bank in Tokyo last month. Critics say Japan manipulates its currency exchange rates to give its companies trade advantages.
A man uses a mobile phone in front of an advertisement of a Japanese bank in Tokyo last month. Critics say Japan manipulates its currency exchange rates to give its companies trade advantages. The Associated Press

In the last 15 years, employment in California’s manufacturing sector has gone over a cliff, from more than 1.8 million jobs in 2000 to fewer than 1.3 million today. Legitimate competition from overseas certainly contributed to those job losses, but so did foreign governments who insist upon manipulating their currencies.

No matter how ingenious the design of American-made products, how lean our companies’ manufacturing processes are, or how highly skilled our domestic workforce is, it’s nearly impossible to compete with rivals backed by governments with their thumbs on the scales. Countries like China and Japan have used undervalued currencies to gain artificial trade advantages for years. It’s clearly cheating. But Washington’s response has been quiet diplomacy, and it hasn’t gotten us much.

All of our trading partners have agreed, in principle, to refrain from such currency interventions, through rules laid out by the World Trade Organization and International Monetary Fund.

But when they do it anyway, U.S. manufacturers and workers have no immediate recourse if they lose market share or face layoffs. Under our trade laws, domestic manufacturers must wait until they’re essentially on life support before they can even seek relief.

Now comes a chance to fix the problems we should have taken care of when the Clinton administration signed NAFTA, or when the U.S. helped serial currency cheater China enter the WTO.

The Obama administration and allies in Congress are pushing for a new trade deal called the Trans-Pacific Partnership, which includes Japan. That deal should include tougher rules on currency manipulation and a streamlined process for trade enforcement, but the administration isn’t interested in such a response.

As a presidential hopeful in 2008, Barack Obama said he’d get tough on the currency issue. Now, he shrugs it off.

That means it’s up to Congress to get this right. California’s delegation, including Rep. Ami Bera of Elk Grove, can make sure that effective trade enforcement and currency manipulation rules are put in place before giving Obama “fast track” authority to present the TPP for an up-or-down vote.

In 2014, our trade deficits with China and Japan were $342 billion and $66 billion, respectively. Those deficits and manufacturing job losses will only continue if we fail to level the playing field. And a new trade deal that doesn’t address these problems won’t help.

Jennifer Drudge of Los Alamitos is California field coordinator with the Alliance for American Manufacturing.

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