WH threatens veto of trade bill over currency language

The White House on Tuesday threatened to veto a key trade bill if controversial anti-currency-manipulation language is attached to it.

{mosads}White House press secretary Josh Earnest said an amendment proposed by GOP Sen. Rob Portman (Ohio) would undermine the independence of the Federal Reserve to set currency rules.

The language has endangered a Trade Promotion Authority (TPA) bill that would pave the way for a sweeping 12-nation trade agreement that is at the top of President Obama’s agenda.

Treasury Secretary Jack Lew told Senate leaders he would recommend Obama veto the fast-track bill if the Senate adds the currency language. He noted that the 11 other trading partners in the TPP won’t join a trade agreement that includes enforceable provisions. 

 “They fear an approach that could ultimately block their central banks from applying appropriate monetary tools to maintain economic stability, and to respond when they, like our Federal Reserve Board, need to address macroeconomic challenges that threaten their domestic, and sometimes the global economy,” he wrote. 

Portman, who is facing a tough reelection race, has said that manufacturing companies in his state have been hurt by competitors that deliberately lower the value of their currency.

His amendment would mandate that future trade agreements include enforceable currency language.

Portman’s push has put him at odds with Republican leaders in Congress who back the TPA legislation, but he defended the amendment Tuesday, arguing it should not have drawn a veto threat.

“I feel strongly that we ought to include currency manipulation … and I think it ought to be enforceable,” Portman said. “That’s what the debate will be about today. I can’t tell you how it’s going to come out. I continue to make the point on substance that this is in our interest.”

While it’s unclear whether Portman will have enough support to get his currency amendment adopted, Senate Finance Committee Chairman Orrin Hatch (R-Utah) warned its passage would kill the trade bill.

“If it does [pass] I’ve been told that this bill is not going anywhere, by both the administration and the House leadership,” Hatch said. “Paul Ryan and I chatted just a few hours ago.”

Ryan (R-Wis.), the chairman of the House Ways and Means Committee, helped draft the fast-track legislation with Hatch and Sen. Ron Wyden (Ore.), the ranking Democrat on the Finance Committee.

Jordain Carney and Vicki Needham contributed.

This story was updated at 4:13 p.m.