Two congressional Democrats on Monday blamed Ford Motor Co.’s exit from Japan on the lack of currency manipulation provisions in a sweeping Asia-Pacific trade deal.
Sen. Sherrod Brown (D-Ohio) and Rep. Debbie Dingell (D-Mich.), who are both opposed to the 12-nation Trans-Pacific Partnership (TPP) that includes Japan, said the agreement doesn’t crack down on exchange rate policies or remove barriers to Tokyo’s auto industry that would help U.S. manufacturers.
“The TPP’s lack of any meaningful currency protections means that it will be more of the same.” We need our government to fight for companies in the global marketplace in the same manner as some other countries do. This business decision by Ford is further evidence of the impact of unfair currency manipulation.”
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“The ink isn’t even dry and we are already seeing proof that this massive agreement will sell out American workers and roll back the remarkable recovery of our auto industry,” Brown said.
Dingel said that “this business decision by Ford is further evidence of the impact of unfair currency manipulation.”
“Until our trade agreements meaningfully address currency manipulation, the mother of all trade barriers, American companies will continue to be threatened and disadvantaged by foreign governments who attempt to tilt the global playing field in favor of their industries and against the United States,” Dingell said.
Ford, which opposes the TPP over the currency issue, said Monday that it will close operations in Japan and Indonesia this year, underscoring the need for improving exchange rate policies long argued to be hampering U.S. automakers in the Asia-Pacific region.
Karen Hampton, Ford’s vice president of communications in the Asia Pacific, said in a statement that “after pursuing every possible option, it has become clear that there is no path to sustained profitability for us in Japan.”
Ford, which has struggled to gain market share in either country, sold fewer than 5,000 cars in Japan last year. No foreign manufacturers are able to build cars in Japan.
Steve Biegun, Ford’s vice president of international government affairs, has long argued for currency policies that give U.S. automakers a better shot of selling more cars in the Japanese market.
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“By our assessment, this TPP would lock in place a $50 billion annual auto trade deficit with Japan,” he said at a hearing held by House Ways and Means Committee Democrats on Jan. 7.
“We do not expect that any global automaker will meaningfully increase exports to Japan as a result of this TPP agreement,” he said.
He argued that a weak yen has helped Japan’s government prop up its own auto manufacturing industry at the expense of any foreign competition.
“And it has been very, very effective, as seen in the fact that Japan today — and for decades running, remains the most closed auto market among developed economies,” Biegun said.
There is a currency side agreement to the TPP deal that received an endorsement from the Peterson Institute for International Economics, which developed a framework for deterring manipulation that was also embraced by a majority in Congress.
The TPP plan requires participating nations to hold regular consultations and provide more information — such as foreign exchange reserves and interventions — aimed at helping to better track currency policies to stop the practice.
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But that side agreement hasn’t quelled critics’ concerns.
Ford has called on the White House to renegotiate the TPP and add enforceable rules prohibiting currency manipulation.
“Our proposed revisions are based on existing IMF commitments by all TPP member countries but add an effective dispute settlement mechanism and penalties to hold currency violators accountable,” Biegun said at the hearing.
“All we are asking is that our free trade partners abide by the commitments that they have already made, and if they do not, that they are held accountable,” he said.
For his part, Brown has urged Congress and the Obama administration to address currency manipulation in the TPP, along with a bipartisan coalition of lawmakers on both sides of the Capitol.
President Obama pushed back against the efforts, arguing that adding currency rules into the TPP would be too complicated and would sink the talks.