Brushing aside President Obama’s objections, the Senate voted overwhelming Thursday to push back against China and other countries deemed guilty of depressing their own currencies to win a trade advantage versus the U.S., potentially complicating the White House’s push for fast-track trade negotiating powers.
Currency manipulation has emerged as a linchpin of the trade debate, with top Democrats saying if Mr. Obama were to accede to pressure from Congress to investigate other countries’ currency behavior, Mr. Obama could win the votes he’ll need to secure the trade promotion authority (TPA) powers he is seeking.
“They may well find that they need currency to move alongside TPA to get anything done in the House of Representatives,” said Sen. Charles E. Schumer, a New York Democrat who has battled both this and previous administrations, begging them to punish China, which the senator said has manipulated the value of the yuan to help bolster its exports.
Senators voted 78-20 to pass a customs enforcement bill that includes the currency manipulation language, with 32 Republicans joining all members of the Democratic Caucus in voting for the new powers.
Senators also easily cleared another bill extending trade preferences for African nations, on a 97-1 vote, then voted to officially end Democrats’ filibuster and begin debating the TPA legislation, which would grant Mr. Obama powers to negotiate trade deals and submit them to Congress for an up-or-down vote.
Democrats had been filibustering, saying they wanted the customs enforcement bill and its currency provisions to be part of the main TPA legislation, arguing that underscored the seriousness of the problem. But after a talking-to by Mr. Obama on Tuesday, free trade Democrats relented and cleared their logjam.
The Senate will begin voting on amendments Monday.
Even if the measure clears the Senate, however, the bigger challenge will be in the House, where a cadre of conservative Republicans is poised to join with most Democrats in opposition.
Republican leaders have said they’ll need Democratic votes to pass the legislation there, but they are getting little help from House Minority Leader Nancy Pelosi, who said they are reluctant to turn over such broad negotiating powers to Mr. Obama for agreements that are still under wraps.
“This fast track is for things unknown,” she said.
She said it’s up to Mr. Boehner to round up the votes, calling it “a test of the speaker’s leadership.”
Republicans have said they’ll deliver an overwhelming number of GOP lawmakers’ support, but have said it’s up to Mr. Obama to rally his own troops to cross the finish line. Despite this week’s hiccups in the Senate and increasing barbs between the White House and Democrats on trade, GOP leaders remained optimistic they’ll succeed.
“I think we will get the votes,” House Committee on Ways and Means Chairman Paul Ryan told C-SPAN Thursday.
Some Democrats are opposed to more free trade deals on principle, saying they inherently end up costing jobs. Others are skeptical, but say they are persuadable as long as they can be convinced the U.S. will insist on fair rules.
Currency manipulation is a major element of that, with lawmakers on both sides of the aisle saying China, in particular, has taken steps to keep the yuan lower than it should be, making Chinese products artificially cheaper and attractive to American consumers, while American products are more expensive and thus less attractive to the Chinese.
Mr. Obama and his allies, however, have repeatedly refused to impose punitive tariffs on other countries over their currency moves.
“Those provisions would undermine our international efforts to address this issue, raise highly problematic questions about consistency with our international obligations, lead to other countries pursuing retaliatory measures that could hurt our exporters, and be difficult to administer,” the White House Office of Management and Budget said in a statement Thursday.
Still, the White House, which has not been shy with veto threats on other bills, did not issue one on the currency bill. That could mean they are willing to deal — but it could also be a signal that, despite the Senate vote, the president’s advisers don’t expect the legislation to reach their desk because it would die in the House.
House Speaker John A. Boehner said the issue would be considered in the House, but he made clear he’s not a fan of the bill.
“To think that Congress can legislate what currency valuations are between countries is almost laughable,” Mr. Boehner said.
Mr. Schumer said free trade backers like Mr. Obama and Mr. Boehner might have to accept currency manipulation legislation as a price to pay for fast-track trade powers.
The legislation would order the administration to investigate undervalued currencies as a potential illegal export subsidy. Countries deemed to be manipulating their currencies for a trade advantage would be hit with duties and tariffs.
Mr. Schumer called it “a shot across China’s bow [and] we’re not going to sit there and do nothing.”
At a press conference Thursday, Mr. Obama said he was worried any moves on punishing currency manipulation could “end up having a blowback effect” on U.S. monetary policy, possibly tying the Federal Reserve’s hands in managing the dollar.
But Mr. Schumer rejected that, saying the way the Senate provision was drafted wouldn’t affect the Fed.
• Stephen Dinan can be reached at sdinan@washingtontimes.com.
Please read our comment policy before commenting.