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U.S. must ‘face up’ and include currency in trade deal, Levin says

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Rep. Sander Levin, a Michigan Democrat, explains in an interview why he’s insisting currency-manipulation language be included in a Pacific trade deal

Rep. Sander Levin says he respects Federal Reserve Chairwoman Janet Yellen, but on one particular issue, she’s wrong.

“We need to face up to this basic issue,” Levin, a Michigan Democrat, says about including currency obligations in trade deals — specifically, the Trans-Pacific Partnership. The U.S. and 11 other Pacific Rim nations are now trying to agree to the final terms of that trade partnership.

“Currency impacts jobs,” Levin told MarketWatch in an interview. “Currency should not be the tool of one country against another.”

Levin, the top Democrat on the House Ways and Means Committee, spoke with MarketWatch on Thursday about Yellen’s opposition to currency-manipulation language in trade agreements; the status of talks on both trade promotion authority and the Trans-Pacific Partnership; and why he believes Congress needs “leverage” over the contents of trade deals. Trade promotion authority, or fast track, would let the president negotiate trade deals Congress could not amend.

Here is a condensed and edited Q&A between Levin and MarketWatch:

MarketWatch: There have been reports negotiators are getting close to a deal on trade promotion authority. What do you know about the status of a TPA deal — and also, how much work remains on the Trans-Pacific Partnership?

Levin: I don’t know the status; you hear different stories every day. I think the key is what’s being negotiated in TPP. That’s the real issue. It would cover 40% of the GDP of the world and include, now, Japan. It would include new economies with whom we’ve never negotiated a trade agreement. And there are issues that have never really been seriously considered in multilateral agreements — for example, state-owned enterprises. And also, while there have been through our efforts basic labor and environmental provisions — the “May 10” standard that essentially was written by some House Democrats — while that is now in the negotiation mix, how it would be implemented is also critical.

This is an important negotiation and it’s really vital to get it right. Negotiations can go both ways in trade; it isn’t automatic that trade is a plus. It can be a plus if it’s shaped the correct way; it can be a minus if it isn’t. So I think the appropriate focus at this point needs to be on the contents of TPP, where it is, where it’s short, and where it can be made better and involving in a meaningful way Congress as a partner.

MarketWatch: Looking back at past trade deals, critics say NAFTA, for example, allowed American jobs to be shipped overseas. So how do you make the case that deals like the TPP would be good for the middle class?

Levin: It depends how it’s shaped. Recent studies showed that between 1999 and 2011, over two million jobs were lost because of import competition from China. China’s not in this [TPP] directly, but some of the issues that are being negotiated would eventually have some impact on issues relating to China — for example, currency.

What is not always understood is that Congress has had a major role in shaping trade agreements, and sometimes through negotiation. As I mentioned, it was a number of us, a few of us, really, House Democrats with the support of other Democrats that essentially put together the May 10 agreement on labor, on environment, on medicines, that became part of the Peru [free trade agreement]that also was negotiated directly between some of us in the House on the Democratic side and the Peruvian government.

Negotiations should go on through the [United States Trade Representative] when it’s willing to tackle these issues. The real question becomes, what is the likely product of these negotiations, in this case led for the U.S. by the USTR, but there has to be this active bipartisan partnership in the Congress. And we should not relinquish that role until we really have a very clear idea as to the likely outcomes.