Currency manipulation may sound more like an idea discussed in Washington than on the assembly lines of South Bend, but local businesses are put at a competitive disadvantage by it. Currency manipulation is a 21st-century trade barrier used by foreign governments to support their domestic industries. This means when countries like Japan use it to boost their industries, American companies and workers feel the pain.
What is currency manipulation? Essentially, it’s when a country buys a foreign currency (primarily U.S. dollars) with its own currency, which decreases the value of its currency. This makes the country’s products less expensive in the United States and American products more expensive in that foreign country. It also can make the country’s products cheaper relative to American products in other countries where we compete head to head, hurting the competitiveness of the American products in those markets. For American automakers, who are huge exporters, currency manipulation can have an outsized impact on local hiring and investment decisions.
Currency manipulation already has taken a toll on American jobs. A recent study by the Peterson Institute for International Economics, a nonprofit institution for rigorous, intellectually open and honest study and discussion of international economic policy, found that as many as 5 million U.S. jobs have been lost due to currency manipulation. However, if it is prohibited it could help us grow a still-struggling economy here at home. According to an Economic Policy Institute study, if the United States truly addressed currency manipulation by its foreign rivals as many as 5.8 million U.S. jobs could be created — with nearly 152,600 of those jobs created here in Indiana.
America is negotiating the Trans-Pacific Partnership, a landmark trade agreement with 11 other Pacific Rim countries. Through the TPP, the United States and its trading partners have a historic opportunity to usher in new trade rules that meet the challenges of a 21st-century economy. This goal can be achieved only by including strong and enforceable currency manipulation rules in the TPP. Without these currency rules, the United States would be giving its foreign competitors license to continue gaming the system at the expense of American workers.
In spite of these head winds, American manufacturing is a success story in our economy. Jobs are returning home and U.S. auto production is expanding, boosting economic growth in communities throughout the country and here in Indiana. Let’s get the TPP trade deal right to ensure that manufacturers and the local businesses they support can grow and invest across America for years to come.
Link to the original article from Indy Star.