The Obama administration is working hard to make new trade deals, such as the Trans-Pacific Partnership with 11 Pacific nations. But getting those deals signed by trading partners and approved in Congress will mean resolving many differences, including one over how nations manage their currencies.
Protesters from U.S. trade unions and other free-trade skeptics say some nations manipulate the value of their currencies to give their exports an unfair price advantage on world markets, hurting American workers.
Senator Chuck Schumer, a New York Democrat, said Washington must do more to protect American workers.
"It's estimated that millions of jobs have gone away" because of trade issues, he said.
A cheap currency can be a big advantage for exporting countries, according to Carnegie Mellon University economics professor Lee Branstetter.
"It is making their goods artificially cheap and our goods artificially expensive," he said. "It is as if they were subsidizing their exports and applying tariffs to our imports."
Branstetter said nations can change the value of their own currencies by printing money and using it to buy U.S. currency and government securities. More demand for U.S. dollars raises their price. Less demand for the other nation's currency makes that currency cheaper.
Worried about manufacturing jobs, some members of Congress say new trade deals must stop currency manipulation. But Branstetter said such regulations also could hamper U.S. economic policies, like the Federal Reserve's ultra-low interest rates, which may have had the unintended effect of pushing down the value of the dollar.
Some experts say adding currency manipulation provisions to the Trans-Pacific Partnership now, when the deal is nearly complete, could kill the agreement.
Undersecretary of State Catherine Novelli said failing to reach a deal could hurt U.S. workers.
"If we don’t get the deal done, rules can be put in place that are not going to be fair and the bar can be set very low," she said, "and that can really impede our ability to export things that our workers and our farmers are producing."
The currency issue is one of several to be worked out before Washington can sign the Trans-Pacific Partnership agreement with 11 other Pacific nations, and the Transatlantic Trade and Investment Partnership with the European Union. A separate agreement, called Trade Promotion Authority, is pending in Congress. Under TPA, Congress can accept or reject trade agreements, but cannot amend or delay them.
While issues remain, the head of the Senate committee that deals with trade issues, Utah Republican Orrin Hatch, said new, trade-friendly Republican majorities in both houses of Congress make it more likely that the deals will eventually win approval.