May 18, 2015
“The White House suggestion that the Portman-Stabenow Amendment, which merely strengthens an existing negotiating objective, would somehow impede our domestic monetary policy or prohibit the Federal Reserve from responding to economic crises runs completely counter to the text of the amendment. It seems clear that the amendment is designed to ensure our trading partners keep their IMF and WTO commitments without undermining any nation's ability to maintain sound domestic monetary policy.”
- Dr. Art Laffer, The Laffer Center.
“Trade is more affected by 10 minutes of movements in exchange rates than by 10 years of trade negotiations.”
- Paul Volker, former Chairman of the Federal Reserve
Call your U.S. Senator and urge them to support the Portman-Stabenow amendment on currency manipulation.
What does Portman-Stabenow do?
America’s automakers depend on free and open international trade. FCA US, Ford and General Motors export about a million vehicles per year to over 100 countries. In fact, one out of five American-produced vehicles by FCA US, Ford and General Motors are exported. Because exporting is so important to the domestic auto industry, American automakers supported every U.S. Free Trade Agreement (FTA) that has been negotiated.
The U.S. is engaged in the Trans Pacific Partnership (TPP) FTA negotiation with 11 other countries, including Japan. While AAPC has supported every past U.S. FTA, it is seeking as a top priority a TPP that includes strong and enforceable currency disciplines in the agreement. Several countries in the TPP negotiations have a history of using currency manipulation to gain an unfair trade advantage over their trade partners, which would undermine the expected benefits of a TPP agreement to the United States.
Currency manipulation acts as a significant non-tariff barrier to our exports. It subsidizes for exports from the country manipulating its currency that can be worth thousands of dollars per vehicle, as well as creating a competitive disadvantage for U.S. exports to that country as well as third party markets where U.S. products compete with the manipulating country’s products. As a result, currency manipulation can be worth billions of dollars for foreign automakers at our expense.
At more than $140 billion in exports per year, automotive products (vehicles and parts) are America’s largest export sector. However, several of the TPP countries included in the talks have markets closed to U.S. auto exports. Obtaining access to these growing auto markets, such as Malaysia and Vietnam, is essential to maintaining and expanding America’s already robust auto exports.
Because of the size and importance of the TPP, as well as the countries involved in the negotiations, it is critical to get it right. That means gaining meaningful access to the region’s closed auto markets and addressing, in a strong and enforceable manner, the biggest 21st century barrier to free and open trade – currency manipulation.
The American Automotive Policy Council raised awareness of the effects of currency manipulation on American jobs and the need to include strong and enforceable currency disciplines into the Trans-Pacific Partnership at events in Ohio, North Carolina and South Carolina.
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