Washington, D.C. – The U.S. Treasury Department has identified countries that it will closely monitor for potential unfair currency manipulation using new criteria for analyzing foreign currencies established by a provision authored by Colorado U.S. Senator Michael Bennet to begin the process of fighting manipulation. The report on foreign exchange policies of the United States’ major trading partners is the first step in the process of Bennet’s provision that was included in the Trade Facilitation and Trade Enforcement Act, which was championed by Oregon U.S. Senator Ron Wyden, the Senate Finance Committee’s Ranking Member.
“The Treasury Department has taken the initial steps to fight back against countries that manipulate their currency and undercut the hard work of Colorado businesses,” Bennet said. “We’re putting these counties on notice that we will not tolerate attempts to unfairly make overseas goods cheaper and exports from Colorado less attractive on the global markets. We fought for this amendment to create real consequences that go as far as keeping these countries out of future trade agreements.”
“The Treasury Department’s report is an important step toward finally holding countries accountable for currency manipulation, and Senator Bennet deserves tremendous credit for these stronger reporting requirements,” Wyden said. “Naming countries who may not be playing by the rules sends a strong message to our trading partners that the United States will not stand by while currency practices undercut U.S. producers. Finally, we have objective, concrete criteria by which we can measure countries like China, Japan, Korea, Taiwan and Germany, which Treasury placed on a monitoring list in its report.”
The customs enforcement law requires the Treasury Department to establish criteria to help identify trading partners that are unfairly manipulating their currency to gain a trade advantage with the United States. The Treasury Department’s initial report identifies five major trading partners that met two of the three criteria: China, Japan, Korea, Taiwan, and Germany. Those countries will be placed on a new “Monitoring List” for continued analysis of their currency policies.
Bennet initially secured his bipartisan amendment to combat currency manipulation during the Senate Finance Committee’s debate of the bill. The amendment, introduced with Finance Committee Chairman Orrin Hatch (R-UT) and Senator Tom Carper (D-DE), allows the United States to take stronger actions to enforce rules against currency manipulation from countries such as China, including barring a violator from participating in future trade agreements.
It requires extensive bilateral engagement with a country found to be improperly interfering with its currency markets. If that country fails to adopt appropriate currency valuation policies within a year, it lays out specific remedial actions that can be taken to punish these countries – including blocking them from future free trade agreements and restricting their access to the U.S. financing and market opportunities. The Peterson Institute for International Economics has said that Bennet’s measure will help our government effectively enforce the joint declaration on unfair currency practices that was secured along-side the Trans-Pacific Partnership (TPP) agreement.
According to the Economic Policy Institute (EPI), eliminating currency manipulation could help create up to 95,000 jobs in Colorado and up to 5.8 million nationwide. It would also help reduce the U.S. trade deficit up to $500 billion and increase GDP by up to 4.9 percent. EPI also estimates that Colorado has lost 59,000 jobs from 2001 through 2013 due to its trade deficit with China.