The 12 members of the Trans-Pacific Partnership (TPP) recently released the text of the deal, promising not to manipulate their currencies for trade advantages and to make regular disclosures about their foreign exchange reserves and cross-border transactions affecting their portfolios.
Eric Shimp, policy advisor in Alston & Bird’s International Trade & Regulatory Group, said that the currency issue will be intensely debated in the run-up to a congressional vote on whether to ratify the TPP. The concern won’t be entirely limited to Democrats, he said.
“I think the congressional approach to currency is going to be vital to ratification because it could unify opponents on both the left and the right,” he said.
Shimp said the declaration will likely leave some critics unsatisfied, since it can’t be enforced through the TPP’s dispute settlement procedures. Some U.S. industry groups will probably argue that the declaration doesn’t go far enough beyond the countries’ pre-existing commitments, he said.
Shimp added that supporters of the deal are likely to contend that the declaration is a step toward greater currency transparency, noting that backers may argue that the currency declaration lays the groundwork for similar disclosure agreements with China, which isn’t part of the deal.