U.S. Trade Chief Defends Move Against Currency Manipulation

By William Mauldin 

        The U.S. trade czar told a top executive of Ford Motor Co. that he's "pleased" with the latest legislation aimed at exposing overseas currency manipulation, despite criticism from Detroit and key lawmakers that the language won't prevent trading partners from weakening their currencies to gain an advantage.
        "We're pleased that the Senate and the House have passed measures that give us more teeth on currency," said Michael Froman, the U.S. trade representative, at The Wall Street Journal's CFO Network event.
        The debate over currency manipulation last month emerged as a top flash point in the broader efforts of the Obama administration and Republican leaders in Congress to enact "fast track" trade authority, which would expedite the conclusion and passage of a sweeping trade agreement among Pacific countries.
        House Democrats put the trade legislation in limbo Friday when they rejected a workers' aid program that was an essential part of the package, and the path forward for Mr. Obama's trade policy is now unclear. Sen. Chuck Schumer (D., N.Y.) has said binding language on currency manipulation may be needed to get the fast track legislation, also known as trade promotion authority, through the House.
        House Republicans moved to strip out Mr. Schumer's currency language from the trade package, while another amendment on binding currency rules backed by Sen. Rob Portman (R., Ohio) was defeated in the Senate.
        Instead, lawmakers who were aligned with the administration offered limited rules that would identify and put pressure on trading partners who abuse exchange rates. The Obama administration prefers to deal with currency gripes bilaterally or through international forums including the International Monetary Fund, and it backs the latest language as a way of targeting other countries without enacting rules that could backfire on quantitative easing or other practices favored in the U.S. and Japan.
        Mr. Froman reiterated the position of officials who are "quite reluctant" to have binding, enforceable currency rules that could constrain monetary policy. Officials from other countries seeking to negotiate the Trans-Pacific Partnership have also opposed such rules.
        Still, executives at Ford have led a group of companies and lawmakers threatening to block the TPP and "fast track" legislation if enforceable currency rules aren't included.
        "It's unfortunate that the administration chooses not to do that," said Bob Shanks, Ford's chief financial officer, at the CFO event.
        Write to William Mauldin at william.mauldin@wsj.com
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        (END) Dow Jones Newswires

        June 16, 2015 18:19 ET (22:19 GMT)

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