CEO Michael Stumo’s comment: “Treasury Secretary Jacob Lew’s opposition to fixing rampant global currency devaluation is extraordinarily off the mark. He says it could hamper quantitative when the proposals target entirely different mechanisms, specifically for an exchange or in reserve accumulation. This shows the administration is simply obstructing a fix. It also shows that the administration is a defender of foreign mercantilism and does not really believe in true free trade.”
[by Greg Robb | February 5, 2015 | MarketWatch]
Treasury Secretary Jacob Lew on Thursday warned Congress against targeting currency manipulation in trade legislation, saying it could have the unintentional consequence of stopping global central banks from buying bonds to combat weak growth.
“We just have to be careful not to define a standard that would lead to a set of rules that would make it impossible for monetary authorities to get economies out of recession,” Lew told the Senate Finance Committee.
Concern about currency manipulation crosses party lines in Congress fueled by support from the auto industry, small manufacturers and trade unions. They argue that many countries like China and Japan seek to hold down the value of their currencies, thus making the cost of their imports into the U.S. cheaper, costing American jobs.
Sen. Bob Casey, Democrat of Pennsylvania, told Lew that currency manipulation has had a “devastating impact” on U.S. businesses.
But the White House is wary. Lew said the White House has already successfully “pushed back” on currency manipulation using existing forums like the Group of Seven and in bilateral talks.
“We’re second to none in pushing back on unfair practices,” Lew said. “We have taken China on…they have responded to our pressure,” he added.
But many members of Congress want to add rules safeguarding against currency manipulation to legislation known as trade promotion authority that would allow only an up-or-down vote on international trade deals.
Looming on the horizon is potential Congressional vote on a comprehensive trade pact between the U.S. and 11 Asian-Pacific nations, known as the Trans-Pacific Partnership. U.S. officials have said a deal on this trade pact is close.
Lew said he was open to finding language on currencies that would be acceptable to the White House and members of Congress.