Categorized | Currency, Trade Agreements

So what did Froman say about currency?

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The still new U.S. trade representative, Michael Froman, is not new to DC or the White House or Obama.  He has been an Obama confidant for years.  Froman and the still new Treasury Secretary met yesterday with Ways and Means Committee members to discuss the Trans Pacific Partnership (TPP) negotiations.Michael Froman

CPA has serious concerns about the TPP because it does not address the biggest issues causing record U.S. trade deficits including currency manipulation, foreign border taxes, state owned enterprises, and multiple mercantilistic issues.  Passage of TPP would send a signal to Washington that Congress still thinks the old-style trade agreements are still ok, and that we can still proceed on a path to global governance.

Committee Chairman Dave Camp (R-Mich.) said he and the panel’s top Democrat, Michigan Rep. Sander Levin, requested the meeting to discuss concerns that members have heard about foreign currency practices and other trade issues.

Obama really, really wants to finish the TPP negotiations this year.  The U.S. Chamber wants him to do it too.  The secret negotiation text has not been disclosed to the public.  The Administration wants so-called Fast Track authority before disclosing the text so Congress can’t amend anything that is negotiated and has to set all other business aside to vote for the deal.

So why is currency important?  Japan’s tariffs on U.S. goods average about 2.5%  But they have caused their currency to decline at least 30% at times since Prime Minister Abe came to office.  The math is stark.  Even if you zero out tariffs… who cares so long as they manipulate currency.

The Chief Trade Counsel for the Minority Staff on Ways and Means told CPA members two weeks ago that Japan has not opened its market anymore today than it did in the 1980′s.  Despite all the WTO and free trade stuff since then.  Japan is a mercantilist country protecting their market with non-tariff means, enabling Toyota to be the biggest automaker in the world.  That’s because Toyota gets protected access to the Japanese domestic market (the third largest auto market in the world), and great access to the U.S. market (the biggest auto market in the world for now), and provides no reciprocity to us.  Its all unilateral… even though some papers they sign may cause the illusion of Japanese concessions.

So the point is why does the TPP fail to address the biggest trade cheating issues causing the massive U.S. trade deficit?  What’s the darned point?  Why isn’t the thing laughed out of the room?

Well… Froman and Lew were supposedly addressing the currency issue to Ways and Means.  Froman because he is the trade ambassador.  Lew because he is the Treasury chief, and money policy is his playground, and treasury people don’t like trade people or legislative people playing in their playground, so the treasury people have fought to keep everyone out of their playground so we don’t have a currency fix.

Anyway… what was said?

Lew and Froman did not speak to reporters after the meeting.

Oh.  Great.  Thanks.  Nothing new.  Except a few of the bromides (aka “bs”) we’ve been fed for 15 years, like this…

A source familiar with the meeting said the administration officials discussed ongoing efforts to address currency issues in multilateral and bilateral forums.

Rangel gave us a bit more of a hint…

Rep. Charlie Rangel (D-N.Y.) said the administration officials agreed that currency manipulation was a serious concern but made no specific commitment to deal with it in the Pacific trade deal talks.

Sander Levin of Michigan has been pushing the hardest.  But no word on whether currency is more important than the TPP to him.

Levin has argued that the Pacific trade pact should include “enforceable” rules against currency manipulation and that Congress should address currency concerns as part of the trade promotion authority bill. Both those issues “are yet to be determined,” Camp said after the meeting.

The upshot is this.  The Administration wants TPP really really bad because it wants a win.  And because trade agreements are foreign policy driven… we give up part of our economy to other countries to bribe them to be our friends and then sell it as job creating bullshit back home.  And TPP must be passed, because it just must be passed, because it would be bad if was not passed, even though currency and trade deficits cause us concern with furrowed brows.

Because of those bad things that may happen, lets pass TPP NOW… and deliberate on the currency and trade deficit issues LATER in a contemplative forum in the future with multi-agency discussion and briefing Congress and talking to officials in those other countries who also have furrowed brows and will contemplate with us.

That’s how it works.  An understanding smile, a pat on the head, and vague future promises.

Unless we make it happen another way.  Which we just might do, because CPA is making things happen.

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