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Steel urges action on currency manipulation

Keywords: Tags  currency manipulation, AISI, American Iron and Steel Institute, letter, outreach, Obama administration, American Automotive Policy Council, Jacob J. Lew Michael B. Froman

NEW YORK — The American Iron and Steel Institute (AISI), the Steel Manufacturers Association (SMA) and 11 other trade associations have urged the Obama administration to include strong and enforceable provisions prohibiting currency manipulation in all future U.S. free-trade agreements, including the Trans-Pacific Partnership (TPP).

Spearheaded by the American Automotive Policy Council, the groups sent a letter July 1 to Treasury Secretary Jacob J. Lew and U.S. Trade Representative Michael B. Froman that was signed by trade organizations representing the U.S. automotive, textile and manufacturing sectors. In the letter, the groups urged the administration to adopt a specific three-part test to determine whether a country is manipulating its currency and to provide for the loss of the trade agreement’s benefits as a consequence of engaging in such manipulation.

The test criteria, which the groups said draw heavily on the indicators produced by the International Monetary Fund (IMF) and economic literature analyzing these indicators, asks three basic questions:

• Did the country have a current account surplus over the six-month period in question?

• Are its foreign exchange reserves more than sufficient (i.e., greater than three months normal imports)?

• Did it add to its foreign exchange reserves over that same six-month period?

Economic studies cited in the letter have estimated that undervalued currencies resulting from intervention have caused an increase in the U.S. trade deficit of up to $500 billion per year.

"To remain internationally competitive, we need the administration to insist that our trading partners are held accountable when they manipulate their currencies to gain a trade advantage," AISI president and chief executive officer Thomas J. Gibson said in a statement. "If currency manipulation is addressed in new trade agreements, it could lower the U.S. trade deficit, boost U.S. economic growth, U.S. exports and lead to more American jobs."

The AISI noted that a similar letter, signed by 230 members of the U.S. House of Representatives and 60 members of the U.S. Senate, was sent to the administration earlier this year. Other organizations signing the latest "outreach" include the American Fiber Manufacturers Association, the Coalition for a Prosperous America, the Copper and Brass Fabricators Council, the Metals Service Center Institute, the National Council for Textiles Organization, the National Tooling and Machining Association, the Precision Machined Products Association, the Precision Metalforming Association, the Tooling, Manufacturing and Technologies Association and the U.S. Industrial Fabrics Institute.

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