U.S. automakers call for currency rule in Pacific trade pact
WASHINGTON (Reuters) -- American automakers on Thursday pushed for rules against currency manipulation to be included in an ambitious trade pact being negotiated between the United States and 11 other Pacific Rim countries.
The American Automotive Policy Council, which represents Chrysler, Ford and General Motors, said participating nations should commit to not manipulating their exchange rates to gain an unfair competitive advantage.
U.S. automakers worry that Japanese competitors may gain an edge in the American market, especially if existing trade restrictions are loosened under the Trans-Pacific Partnership (TPP), which negotiators hope to finalize in coming months.
"Even the most promising trade pacts can be undermined by currency manipulation," Matt Blunt, president of the council, told reporters on a conference call. "The final TPP agreement must include strong and enforceable currency disciplines that allow markets and not government intervention to set exchange rates."
The council's proposal would require TPP countries to be transparent with information that includes their foreign exchange holdings and interventions to purchase foreign assets.
If a TPP member is found breaching the currency rules, the automakers' proposal would allow member countries to suspend the tariff benefits of the offending country for at least a year.
The group said its proposal would not impede any TPP country from having an independent monetary policy, and would not prevent central banks from pursuing the bond-buying stimulus programs that have been employed in the United States and Japan. Those programs have been criticized from some quarters for weakening currencies.
Countries negotiating the TPP include Mexico, Chile, Canada, Australia and Malaysia, along with Japan and the United States. A final deal would establish a free-trade bloc stretching across a region that makes up nearly 40 percent of the global economy and is populated by about 800 million people.
The new demands add further challenges to the massive trade deal that the Obama administration had aimed to finalize before the end of last year.
Some legislators, including Republican Senator Lindsey Graham of South Carolina and Sander Levin, the top Democrat on the House Ways and Means Committee, have said they would reject a TPP deal that did not include a currency manipulation clause.
TPP negotiators failed to reach an agreement after a four-day meeting in Singapore in December, remaining gridlocked over issues like intellectual property, agricultural tariffs and state-owned enterprises.
The Obama administration has also sought Trade Promotion Authority to allow it to speed up trade deals through Congress.Contact Automotive News