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Obama, Senate Republicans work together on trade bill

WASHINGTON (AP) — The Obama administration and Senate Republicans worked in unusual harmony Tuesday to advance major trade legislation opposed by many rank-and-file Democrats, an expanding struggle already leaving a mark on the 2016 campaigns for the White House and control of Congress.

In rapid-fire order, the administration threatened to veto a proposed change in the trade bill to require U.S. negotiators to target currency manipulation more directly in trade talks, and Senate Republican leader Mitch McConnell said his party was prepared to vote down the amendment.

The administration’s veto threat came in the form of a letter from Treasury Secretary Jacob Lew to the bill’s leading supporters. He warned that approving the amendment could cause trade partners to walk away from talks on a 12-nation deal among countries that border the Pacific Ocean “and cause us to lose ground on holding countries accountable on currency.”

He also warned the proposed change could “give our trading partners the power to challenge legitimate U.S. monetary policies needed to ensure strong employment and a healthy robust economy, an outcome we would find unacceptable.”

“We’ll be working hard to keep any amendment off the bill that could tank” it, he said of the proposal, backed by Sens. Rob Portman, a Republican, Debbie Stabenow, a Democrat, and others.

McConnell is one of President Barack Obama’s fiercest critics in Congress, and his comment underscored the unusual political lines created by a bill to let the Democratic president negotiate global trade deals that Congress could approve or reject, but not change. The White House and pro-business Republicans support the measure, while union-backed Democrats oppose it.

Portman, who once served as President George W. Bush’s special trade representative, is also a likely supporter of the bill. At the same time, he faces a competitive re-election campaign in his Midwestern political swing state next year, and has played a central role in efforts to make the legislation require American negotiators to give higher importance to combatting currency manipulation by other countries.

The division has spilled over into the 2016 race for the White House, as well. Former Secretary of State Hillary Rodham Clinton, whose husband negotiated the North American Free Trade Agreement with Canada and Mexico when he sat in the White House, stubbornly refused Tuesday to say if she favored or opposed the legislation to give Obama the authority to conclude similar deals.

“I want to judge the final agreement,” she told reporters as she campaigned in Iowa, and said her concerns include any deal’s impact on jobs, wages and economic expansion in the United States.

Her statement mirrors the apprehensions of many Democrats in Congress, who soon won’t have the luxury of declining to state a position. They complain that they are being asked to trust Obama to conclude a trade deal they haven’t seen — and wouldn’t be able to change once they do.

As the vote approached, Secretary of State John Kerry urged support for the measure in a speech at a Boeing plant in Renton, Washington state. Without a deal, he said, “standards will be driven down, not up and America’s competitors will get more business at the expense of domestic U.S. businesses.”

The drive to give currency manipulation a more central role in trade talks is caused chiefly by concerns about Japan, which is part of the current round of negotiations. There are also constant concerns about China, which is not.

In his letter, Lew said that the United States has worked hard to combat alleged currency manipulation by both nations in recent years.

“China’s currency has appreciated by nearly 30 percent since 2010 and Japan has not intervened in the foreign exchange market in more than three years,” he wrote.

Stabenow, in remarks on the Senate floor, said that when governments intervene in the marketplace to manipulate the value of their currency, it “is cheating, plain and simple. It means that foreign products are cheaper here and U.S. products are more expensive there.”

Japan’s currency, the yen, has weakened precipitously as the central bank spent trillions of yen (hundreds of billions of dollars) seeking to hoist the economy out of a deflationary rut. Japanese leaders insist the policies are not aimed at manipulating the currency for a trade advantage, and the weaker yen has not led to an export boom.

Passage of the fast-track legislation by Congress is crucial for success of the 12-nation Trans-Pacific Partnership, the economy minister, Akira Amari, told reporters Tuesday in Tokyo.

“It’s a pretty severe situation,” the financial newspaper Nikkei quoted Amari as saying. “It’s because of the delay in congressional approval of necessary trade promotion authority for the president.”

McConnell has said repeatedly he intends to have the Senate complete work on the trade bill by week’s end, when lawmakers are due to begin a Memorial Day vacation. In an effort to make good on his pledge he set up a test vote for Thursday, and will need a 60-vote majority to limit debate. The bill itself appears to have more than 60 votes in its favor, including most Republicans and a dozen or so Democrats.

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Associated Press writers Jim Kuhnhenn in Washington, Julie Pace in Cedar Falls, Iowa, Matthew Lee in Renton, Washington state, and Elaine Kurtenbach in Tokyo contributed to this report.

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