April 26, 2015

U.S. House, Senate Trade Bills Make It Out Of Committee Without Adequate Currency Provisions

Last week the U.S. Senate Finance Committee and the U.S. House Ways and Means Committee approved their respective drafts of Trade Promotion Authority (TPA), or so-called “fast track,” legislation. While the Senate committee passed a separate measure to give the U.S. Commerce Department new authority to address currency manipulation, it defeated an amendment to the TPA bill that would have added enforceable currency rules. The House panel also defeated similar efforts. 

In the Senate, committee members voted 15-11 against a bipartisan amendment offered by Sen. Rob Portman (R-OH) and Sen. Debbie Stabenow (D-MI) that would require the administration to seek enforceable rules against currency manipulation in trade agreements. MSCI supported this amendment; the White House and Republicans leaders opposed it. Last Monday, a White House official said, “[N]ot all approaches to addressing currency would have a positive impact for American workers and companies. We are opposed to enforceable currency disciplines because of the risk they create to our ability to create jobs and protect our economy. We also oppose the current Senate legislation that attempts to address currency using trade remedies, because it would be difficult to administer, raises questions of consistency with our international obligations, and could even be counterproductive.” 

Sen. Portman said he plans to offer his amendment on the Senate floor when the full chamber debates the Finance Committee’s bill. 

The Finance Committee did adopt a plan offered by Sen. Charles Schumer (D-NY) that would require the U.S. Commerce Department to determine whether countries that undervalue their currency are providing an illegal trade subsidy. According to Politico, “That [measure] could lead to hefty duties on steel and certain other Chinese manufactured goods.” The White House “opposes that idea on the grounds it would invite trade retaliation and potentially violate World Trade Organization rules.” Because that amendment was offered to a customs services and trade enforcement bill, it will not be part of TPA bill senators are expected to consider over the next few weeks. 

The Finance Committee also approved an amendment offered by Sen. Mike Bennet (D-CO) that adopts the Obama Administration’s approach to addressing currency manipulation. According to Washington Trade Daily (subscription required) that amendment, which passed unanimously, “lays out additional criteria for Treasury to initiate discussions with other countries on exchange rate intervention, but fall short of actually citing a country for currency manipulation.” 

The Finance Committee issued a summary of the committee’s deliberations, including roll call votes on all amendments, which is available here. 

Meanwhile, Democrats on the House Ways and Means Committee also offered amendments that would address currency manipulation, but those efforts were either defeated or ruled out of order and not considered. 

MSCI President and CEO Bob Weidner commented on the committees’ deliberations. In a press release, Weidner said he was disappointed the committees did not adopt strong provisions to address currency manipulation. Weidner explained, “Currency manipulation is real. Earlier this year, the majority of G-20 finance ministers effectively endorsed currency devaluation as a tool to prop up their economies” and argued, “Congress must address this threat by including strong enforceable currency rules in its final fast-track legislation.” Weidner also praised Sen. Portman’s and Sen. Stabenow’s effort to add currency rules to the Senate TPA bill and said he hoped their colleagues would support efforts to add that amendment to the TPA bill when it comes to the floor. (Read the full press release here.) Sen. Portman argued for his amendment in a letter to The Wall Street Journal last week. 

The House and Senate are expected to vote on their respective TPA bills in the next few weeks. The House panel passed its bill on a 25-13 vote while the Senate passed its version on a 20-6 vote. Those margins indicate there is significant support to pass a TPA bill without currency rules. (According to Politico Pro – subscription required – House leaders are, indeed, “confident” they have the votes to pass its TPA bill.) As such, MSCI urges its members to call or write to their representatives and senators to urge them to vote for amendments, like Sen. Portman’s and Sen. Stabenow’s, that add strong, enforceable currency provisions to these bills.