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August 3, 2015

No Deal On Trans-Pacific Partnership, But United States Finally Addresses Currency Manipulation In Debate

According to a New York Times report late last Friday night, negotiations on the Trans-Pacific Partnership, a free trade agreement between the United States, Canada and several Pacific nations, hit an impasse as negotiators deadlocked over issues involving the pharmaceutical and agriculture industries. (Click here for a description of the disagreements.) 

The countries’ trade ministers were optimistic they could get back on course, however, and noted they had made “significant progress” up until Friday. U.S. Trade Representative Michael Froman said, “There are an enormous number of issues that one works through at these talks, narrowing differences, finding landing zones … I am very impressed with the work that has been done. I am gratified by the progress that has been made.” A date for a new set of negotiations has not yet been set and, according to The Times, the stalemate means it’s likely Congress won’t debate any deal until next year, which, of course, is a presidential election year. That fact complicates matters for President Barack Obama since any agreement will likely split his own party and unite Republicans. 

Meanwhile, according to news reports earlier in the week, for the first time, the United States brought up the issue of currency manipulation in TPP negotiations. Politico’s “Morning Trade” reported Thursday that a U.S. Treasury Department spokesperson said, “We are discussing with all of our TPP partners provisions to promote our mutual interest in preventing unfair currency practices … The currency provisions we are developing in the context of TPP would promote greater accountability of currency policies.” 

Politico said the Treasury Department’s efforts were the direct result of a provision in the Trade Promotion Authority bill passed by Congress earlier this summer that required U.S. trade negotiators to make currency manipulation a principal negotiating objective. (MSCI supported that provision.) Specifically, last week TPP negotiators discussed a proposal that would establish a “top-level forum” to address currency manipulation. Unfortunately, also according to Politico, “[T]he proposal wouldn't establish a prohibition against currency manipulation” – something the Obama administration opposes – and it would only be included as a “side” agreement to the TPP, not as part of it. 

A spokesperson for Sen. Rob Portman (R-OH), a forceful advocate of the United States taking strong measures to address currency manipulation, said her boss is “reviewing” the proposal and believes the forum “must have teeth to ensure American workers are on a level playing field with global competitors.”