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Will the Administration’s Imminent Report to Congress on Trade Partners’ Currency Practices Once Again Fall Short of Its Mandate, Undermining a Key Trump Campaign Trade Reform Pledge?

Statement of Lori Wallach, Director, Public Citizen’s Global Trade Watch

Note: The Trump administration will release its latest report on trade partners’ currency practices imminently. Like the administration’s previous four iterations of this report mandated by Congress to identify countries whose distortion of currency values to gain trade advantages must be addressed, it is unlikely any country will be listed. Under the current criteria, set by the Obama administration, no country is again likely to be named. Public Citizen has recommended changes to the criteria that would use the authority granted by Congress to cover more countries and include broader data and thus actually identify countries that gain trade advantages using currency practices. The Trump Treasury Department has stuck with the old Obama administration criteria.

“One of Trump’s most emphatic campaign promises was to declare China a currency manipulator on Day One and crack down on any country misaligning its currency to cheat on trade, but Trump’s Treasury secretary has chosen to rely on criteria created by the previous administration that ensure no action is taken.

The Trump Treasury Department approach reflects a business-as-usual, wink-wink-nod-nod relationship with the multinational corporate job outsourcers who instead of making goods here can import products more cheaply back into the U.S. because of misaligned currencies. This situation that has contributed to the loss of millions of U.S. manufacturing jobs.

In the context of record-setting U.S. trade deficits, the administration must take full advantage of its opportunities to discipline countries that manage their currency values in a way that affects trade. While the NAFTA 2.0 deal sets an important precedent by being the first to include a currency provision in its main text, it provides no mechanism for actually disciplining countries that manage their currency values in a way that affects trade.

The Trump administration must take full advantage of the authority Congress has provided the Treasury to influence the foreign exchange practices of any trading partner through the semi-annual reporting process.”

Background: Large U.S. structural trade deficits consistent with misaligned currencies have grown in recent years. Data released on March 6 by the U.S. Census Bureau show record-setting U.S. goods trade deficits, increasing each year since Trump came into office. The U.S. goods trade deficit with China of $419 billion in 2018 is the highest ever recorded while the U.S. goods trade deficit with the world in 2018 reached $879 billion, the highest in the decade since before the 2008-09 financial crisis.