Credit Where Due
By Scott Lincicome
Kudos to the Obama Administration.
Yesterday, the US Treasury Department released its Semi-Annual Report to Congress on International Economic and Exchange Rate Policies, aka "the report wherein Treasury decides whether US trading partners are 'currency manipulators' under US law." As expected, and as it did back in April, the Department declined to label China a currency manipulator, and for that I commend the administration. Here's the money quote from the report (PDF):
The Omnibus Trade and Competitiveness Act of 1988 (the “Act”) requires the Secretary of the Treasury to provide biannual reports on the international economic and exchange rate policies of the major trading partners of the United States. Under Section 3004 of the Act, the report must consider whether any foreign economy manipulates its rate of exchange against the U.S. dollar to prevent effective balance of payments adjustments or to gain unfair competitive advantage in international trade. For the period covered in this Report, January 1, 2009 to June 30, 2009, Treasury has concluded that no major trading partner of the United States met the standards identified in Section 3004 of the Act.
The decision is the right one - China is not a "currency manipulator" under the statute; any attempt to label it as such would have resulted in a trade war with China that would make the Section 421 spat look like a third-grade tickle fight; and it would have completely obliterated any chance that either the end-October US-China Joint Commission on Commerce and Trade (JCCT) meetings or the Obama-Hu summit in November would achieve anything meaningful. And Obama had to (again) turn down a direct, public demand from a key constituent - the US labor unions. So kudos are in order.
I've yet to see a response from the unions or manufacturers that lobbied for the currency labeling, but trade-disinformant-extraordinaire Senator Sherrod Brown (D-OH) was quick to condemn the move. (Of course he was.) His statement was "classic Brown," and that's not a good thing - falsely blaming the US-China trade deficit on the loss of "4 million" manufacturing jobs (see pp. 20-21 here for the factcheck on that bogus stat) and falsely claiming that the "best estimates" show that China's currency undervaluation amounts to a "40 percent subsidy" (which could only be true if by "best" he means "worst" and if it's 2003 - before China's currency appreciated by about 15-20% against the dollar).
But I digress. I was supposed to be applauding the Treasury decision. So...
*golf clap*
(Your regularly scheduled criticism, I'm sure, will be back tomorrow.)
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In 2008, Scott Lincicome served as a senior trade policy adviser for Senator John McCain’s Presidential campaign. He blogs at http://lincicome.blogspot.com/
