By Matt Blunt
American businesses could be hiring more workers today if we ended unfair trade practices used by some of our trading partners. No matter how competitive companies are in New York, they struggle to keep up with foreign competitors that are given an unearned advantage because of currency manipulation.
Currency manipulation may sound more like an idea discussed in Washington than on the assembly lines of Buffalo, 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 can also 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.
Currency manipulation has already 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. 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 – nearly 296,400 of them here in New York.
America is currently negotiating the Trans-Pacific Partnership (TPP), 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 only be achieved 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 headwinds, 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 New York. 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.
Matt Blunt is a former governor of Missouri and the president of the American Automotive Policy Council.