The Cable

An Ohio Free Trade Champion Just Introduced a Measure That Could Kill the TPP

Sen. Rob Portman (R-Ohio) is a free trade champion. But he's introduced a measure that could kill a massive Asian trade partnership.

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A longtime champion of free trade is under fire from his own party and the White House for pushing a measure that could sink a massive trade pact between the United States and Asian nations — and one the Obama administration insists is necessary to compete economically in the 21st century.

On Tuesday, Sen. Rob Portman (R-Ohio) filed plans to prevent currency manipulation as an amendment to the Trade Provisional Authority, or TPA. The amendment hold nations like Japan and Malaysia to International Monetary Fund standards — rules both of those nations have flouted in the past.

If the TPA passes, it would allow the Senate to speed passage of the Trans-Pacific Partnership — making it the largest trade pact in U.S. history. The White House says the TPP would increase American exports to Asia by $123.5 billion, and insists Portman’s plan is a “poison pill” that would scuttle negotiations.

“When foreign competitors tilt the playing field by manipulating their currencies, Ohio workers suffer,” Portman said in an emailed statement Tuesday. “That means American-made exports are more expensive, while our competitors’ exports into the United States are cheaper.”

“That’s not fair for American workers who can compete with anyone on a level playing field.”

The debate over the Trans-Pacific Partnership — a deal five years in the making and that largely has been negotiated in secret — is tying Portman in knots. As former President George W. Bush’s chief trade representative, Portman has vocally supported other international trade deals in the past. But he now is now stuck between the reality on the ground in his home state of Ohio and his party’s free-trade ideology.

Republican leadership and conservative media are blasting him for mucking the works as the deal slogs through the legislative process. But his insistence on including the anti-manipulation amendment plays well back home in the Rust Belt, which has been devastated by the loss of manufacturing jobs — something unions blame on cheap, foreign, labor.

At the same time, Portman is gaining allies from the far left of the Democratic Party, including liberal darling Sen. Elizabeth Warren (D-Mass.), who wants the White House to punish currency manipulators with measures that have sharper teeth. Labor unions and the U.S. auto and steel industries also want the White House to get tougher on countries that purposely keep the value of their currency low.

This practice helps stimulate economic growth because it maintains low prices for goods from nations that artificially deflate the value of their currency. This creates an incentive for American consumers to buy foreign products.

“Rob Portman used to be the United States trade representative. The fact he thinks there should be currency rules in the deal tells you something,” Jared Bernstein, a former chief economist to Vice President Joe Biden, told Foreign Policy.

“To ensure the benefits of the trade deal, it makes sense to have enforceable currency discipline in it.”

Josh Bivens, director of research and policy at the Economic Policy Institute, said strong steps against currency manipulation by Asian countries would send a signal to China, which has used undervalued money to its economic advantage for years.

But Portman is likely waging a quixotic fight in trying to get anything enforceable into the deal. House leaders show no sign of taking up his currency provision. In an April 21 letter, Treasury Secretary Jack Lew argued that including enforcements against currency manipulation would open U.S. monetary policy to challenges from foreign governments, and made clear the White House opposes it.

On Tuesday, Lew promised to address currency manipulation “in the context” of the trade pact, but not in the agreement itself.

“I don’t think there’s another country in the world that would agree to that,” Lew said Tuesday at a conference on international economic policy. “So I think it’s a poison pill in terms of getting an agreement on TPP.”

But Portman’s vocal support has brought the issue to the forefront of the trade debate, and given a voice to groups that want the United States to crack down. Celeste Drake, a trade and globalization specialist at the AFL-CIO, a group that wants manipulation restrictions to be part of the law, said it forces President Barack Obama to defend why it’s not included, which opens him up to critics on both the left and right.

Bernstein said there are ways to less formally address currency manipulation than the deal provides. But refusing to include the provisions Portman is pushing is a lost opportunity to address monetary foul play in a binding framework that the TPP would create.

Photo credit: Ethan Miller/Getty Images

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