TPP faces headwinds as US Congress pushes on currency

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The Obama administration faced increasing pressure from Congress to push for aggressive currency measures in Pacific trade talks, amid mounting signs of US political unease over the negotiations and shape of a possible agreement.

Dave Camp, the Republican chairman of the House ways and means committee and the most senior US lawmaker on trade in the lower chamber, warned Barack Obama’s trade team to do “more” to address currency as the Trans-Pacific Partnership talks approach their final stages.

“It’s time to have a serious discussion about the pros and cons of including currency provisions in trade agreements, and what those provisions might look like,” Mr Camp said. “If the administration continues to delay its engagement on this politically and economically important issue, it will undermine support for TPP and could delay our ability to conclude TPP.”

A majority of members of Congress have urged Mr Obama to include provisions that would punish countries for undervaluing their currencies in the trade talks with 11 other Pacific nations. The push for including currency measures in TPP became more acute since Japan joined the negotiations, amid concerns that it has been manipulating and undervaluing the yen to boost exports.

On Wednesday, Lindsey Graham, a Republican senator from South Carolina, and Sandy Levin, a senior Democratic congressman from Michigan, held a roundtable with US economists supporting the inclusion of currency in TPP and indicated they were unlikely to vote for the deal if their demands were not met.

“This is the place to take a stand,” said Mr Graham. “It needs to be dealt with,” added Mr Levin.

US business groups fear that forcing Japan’s hand on currency could cause it and other nations to balk at the trade deal and unravel the entire negotiation. The US and other countries have held nearly two dozen negotiating sessions on TPP and have been hoping to conclude the pact by the end of the year.

This week, Jack Lew, the US treasury secretary, travelled to four critical TPP countries, including Japan, Singapore, Malaysia and Vietnam, to push for the deal. But Mr Lew did not offer a clear sign of how hard Treasury might push – if at all – for currency to be part of TPP in the final stages of the talks.

“I think if you look at the agreements that we’ve reached in the G7 and the G20, there is an important set of understandings about how currency and matters should be handled, in terms of the substance,” Mr Lew told reporters in Singapore. “And we have continued to pursue that in multilateral and bilateral discussions.”

Meanwhile, political opposition to the Obama administration’s second term trade agenda was laid bare as about 150 members of the president’s own Democratic party in the House signalled their opposition to “fast track” legislation that would make it easier for the TPP to move through Congress. Their letter came a day after 22 Republicans in the House also said they would fight any request for fast track negotiating authority from the president.

“The US cannot afford another trade agreement that replicates the mistakes of the past. We can and must do better,” said the letter led by Rosa DeLauro and George Miller, two senior House Democrats.

Political scepticism of TPP was further stoked by the release by WikiLeaks of secret text dating back to August of the intellectual property chapters in the trade talks, which showed the US pushing for tough rules and protections for drug patents, copyright laws, and open data flows. Consumer groups said the texts offered evidence that the Obama administration’s priorities in the TPP pact were driven by corporate demands from Hollywood, big pharmaceuticals and technology companies.

The Obama administration has always argued that TPP would help bolster economic growth and job creation across the US, and that it would make sure not to undermine consumer protections, or regulatory, environmental and labour standards.

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