Trade negotiator warns currency push could backfire
President Obama’s top trade representative on Tuesday warned that including currency manipulation provisions in the pending trade deal with Pacific nations could backfire.
U.S. Trade Representative Mike Froman said that the measures Japan is using to spark inflation are not dissimilar to actions the Federal Reserve has taken to pump up the economy.
“Certainly we do not want to put ourselves in a defensive position as well,” he said.
Members of Congress have called on the Obama administration to consider currency manipulation as part of the TransPacific Partnership (TPP) trade talks. Critics accuse China and Japan of devaluing their currencies to promote exports and make imports pricier.
Froman said that the U.S. considers currency devaluation a “serious” problem, adding that the Chinese renminbi’s 17 percent increase in recent years is not sufficient.
But Froman said the administration has not decided the best way to address the currency issue.
The trade representative said that the USTR is working “literally around the clock” to finish TPP by this year, but said the U.S. will not agree to bad deal just to make the deadline.
At the same event, Treasury Secretary Jack Lew offered praise of new economic reforms announced by China’s Communist Party this month,
“I definitely had the sense that they are very serious about economic reform…what I didn’t was get a good sense of is the sequence or pace of change,” he said.
He said the setup of a new Shanghai Economic Zone will be an early test of the reforms and the combined changes could lead to a boon for U.S. financial services companies.
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