The Trojan Horse of 'currency manipulation'

AS the United States continues to negotiate a historic deal with 11 Asia-Pacific trading partners - the Trans-Pacific Partnership (TPP), that will increase market access in the United States in return for reduced trade barriers in other participating countries - officials and lawmakers in Washington have been debating whether the accord would help advance US economic interests.

As part of this debate, several Democrats and Republicans on Capitol Hill are pressing the Obama Administration to take a stronger stand against trading partners that allegedly seek to gain an edge with a weaker currency that makes their exports cheaper. Indeed, lawmakers have insisted that addressing currency concerns was key to winning their support for a bill to fast-track trade agreements through Congress, known as the trade promotion authority (TPA).

According to this argument, "currency manipulation" by countries that engage in systematic undervaluation of currencies as part of an effort to export more, should be considered a critical public policy problem - not unlike US demands for intellectual property protection - and one that must be addressed in any free trade agreement that the United States signs. Notably, the lawmakers argue, several of the economies that are candidates for membership in the TPP engage in this kind of behavior.