Time for modern trade policy in TPP
Via The Hill
By former Gov. Matt Blunt (R-Mo.)
The Trans-Pacific Partnership (TPP) can serve as a foundation of stability - fostering security and economic growth throughout the Pacific Rim region. That is why it is critical that the 12 countries negotiating TPP focus on crafting a modern and relevant trade agreement.
As global automakers that benefit from open trade and investment, American automakers Chrysler, Ford and GM, have supported every free trade agreement (FTA) that the United States has negotiated. America’s automakers want to support the Trans-Pacific Partnership (TPP) trade pact for the same reason – its potential to encourage commerce and improve the standard of living for millions of people. However, like any trade agreement, TPP has to be a "win-win" for all the nations involved. That means for TPP to work, all the negotiating nations need to agree to a pact that includes rules that prevent any one country from undermining the intent of the agreement or allow any member of the agreement to unfairly disadvantage other FTA partners.
The TPP member states have set themselves the admirable goal of achieving “an ambitious, comprehensive and high-standard agreement”. The TPP, once completed, will be the most important free trade agreement since NAFTA and will set the bar for 21st century free trade agreements. A critical component of this modern trade pact will be the inclusion of strong and enforceable provisions prohibiting currency manipulation to ensure that TPP member nations can no longer rely on outdated and one-sided non-tariff barriers and trade policies that aid domestic industries at the expense of their trading partners.
Over the past few years, the American Automotive Policy Council (AAPC) has made the case for strong and enforceable currency manipulation provisions to be included in our free trade agreements especially in the TPP. Recently, AAPC outlined a currency proposal based on International Monetary Fund commitments already made by all TPP member nations. The AAPC proposal would prohibit the manipulation of exchange rates by TPP members and allow other parties to the agreement to suspend TPP tariff benefits if a country engages in such practices. If the AAPC proposal were included in the TPP, it would result in a trade pact that ensures that currency manipulation practices by TPP members do not frustrate the market access commitments set forth in the final agreement.
For instance, the broad cooperation and friendship between Japan and America has not translated into equitable trade and currency exchange rate relationship. Japan continues to maintain non-tariff trade barriers to keep foreign automakers, including European and other Asian manufacturers, out of the domestic Japanese automotive market. And even the U.S. Department of Treasury notes that Japan has historically intervened directly the value of the yen. In a rules-based, 21st century trade deal, we believe Japan should agree to enforceable provisions around existing currency commitments.
The nature of successful free trade agreements is that every nation agrees to core principles. A successful TPP accord cannot be reached while some nations continue to manipulate policy to protect national champions.
The Trans-Pacific Partnership has the potential to give autoworkers in Japan and the United States the chance to create auto products that can be sold, free of all trade barriers, throughout the region. It is critical that a trade pact of such scope and magnitude live up to its potential and do away with old, failed trade policies like currency manipulation and other non-tariff trade barriers.