by Michael Stumo: Why would the White House issue a veto threat on currency legislation last May and now call upon Congress to pass a currency bill?
White House Spokesman Josh Earnest told reporters today Congress needs to pass legislation to give the Administration “additional tools to counter unfair currency policies by China or anybody else. … There is more that we would like to see Congress do.”
It is hard to take Earnest seriously for many reasons. First, the Administration has refused to name any country a currency manipulator. The President has the authority to do so under the 1988 Trade and Competitiveness Act. Calling for more authority without using his current authority is really not credible.
Second, the US Senate passed an aggressive currency manipulation bill in May. That bill would give the Commerce Department the authority - in the context of a trade remedies case brought before it by an industry - to classify currency undervaluation as an unlawful foreign export subsidy. The White House opposed that bill.
Third, also last May, Senators Rob Portman (R-OH) and Debbie Stabenow (D-MI) pushed for an amendment to Fast Track trade authority that would require future trade deals to have strong remedies for currency undervaluation. The White House issued a veto threat in the event the amendment passed. The amendment did not pass.
So the Obama administration does not use its current authority on currency and opposed strong new authority on currency. Yet it calls for more authority in a press conference today.
I think I can be forgiven for my skepticism.
(Note: Currency undervaluation is a decades long challenge. Japan was a primary aggressor in the 1980’s. As a result, Ronald Reagan and James Baker got the G-5 finance ministers in a room at the Plaza Hotel in New York in September 1985. When they came out, the other nations had agreed to revalue their currencies in relation to the dollar. Japan’s yen more than doubled in value in relation to the dollar in the next year.
Currency remained a big issue which resulted in then-strong currency provisions in the 1988 Trade and Competitiveness Act. The Act required Treasury to monitor currency undervaluation globally, issue public reports twice a year, designate countries which manipulate, engage in discussions with those countries and take further action.)