In addition to the concerns about the Trans-Pacific Partnership (TPP) treaty raised in my two previous posts (see list below), it lacks provisions for addressing currency manipulation. This has brought criticism from many parties, including some in the corporate world. Although China (which is not a participant in the TPP) is the most notorious manipulator of its currency’s exchange rate, Japan and a number of other countries in the TPP have also manipulated their exchange rates. These countries manipulate the exchange rate between their currency and others to make imports more expensive and their exports cheaper. This has been a significant contributor to the positive balance of trade these countries have with the US and to our trade deficit.
Given the weakness of other arguments for the TPP, the Obama administration is promoting the TPP as a geopolitical response to the growing power of China. The administration says that the TPP will allow the US and the other TPP participants to balance China’s economic and hegemonic power in the region. However, China is already part of the World Trade Organization, has free trade agreements with half of the TPP participants, is the main trading partner of a number of them, and is currently negotiating separate economic partnerships with the others. So the TPP will have little impact on China’s growing influence.
Furthermore, China’s growing economic power is already clearly present even here in the US. It has negotiated the transfer to its shores of manufacturing and technology from the US in a number of areas, including wind and solar energy, high technology batteries, and the building of aircraft (from none other than General Electric).
China manipulates its currency to maintain a very favorable balance of trade with the US and it uses its holdings of $3.5 trillion of US dollar investments (primarily US Treasury bonds) as a strategic global investment fund. In short, China has a comprehensive, global trade and investment strategy that will move forward regardless of the TPP. [1]
Given the problems with the TPP:
- Enshrining corporate power, particularly through the Investor-State Dispute Resolution tribunals,
- Lack of effective and enforceable protections for workers and the environment,
- Excessive patent and copyright protections, for example for prescription drugs,
- Failure to prevent currency manipulation, and
- Ineffectiveness as a counterbalance to China’s growing regional and global power,
and that it will have a miniscule impact on actual trade, it should be rejected. I urge you to contact your US Senators and Representative to encourage them to oppose the TPP.
You can find contact information for your US Representative at http://www.house.gov/representatives/find/ and for your US Senators at http://www.senate.gov/general/contact_information/senators_cfm.cfm.
[1] Prestowitz, C., Fall 2015, “Our incoherent China policy: The proposed Trans-Pacific Partnership is bad economics – and even worse geopolitics as containment of China,” The American Prospect
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