December 02, 2014

For Immediate Release:
December 2, 2014
Contact: Colin Dunn
(202) 400 - 2609


AAPC Statement on Dr. Art Laffer’s Currency Manipulation Study


WASHINGTON, D.C. – American Automotive Policy Council President Matt Blunt issued today the following statement on Dr. Art Laffer’s study on currency manipulation:

“Dr. Laffer’s study is a pivotal piece adding to the growing momentum against currency manipulation. It highlights the one-sided competitive advantage our trading partners gain when they manipulate their currencies and the damage it inflicts on the U.S. economy.

“As Congress considers Trade Promotion Authority (TPA) and negotiations continue on the Trans-Pacific Partnership (TPP) and Transatlantic Trade and Investment Partnership (TTIP) agreements, the inclusion of strong and enforceable currency disciplines are more important now than ever before. Dr. Laffer’s study illustrates the direct and negative impact foreign currency undervaluation has on U.S. jobs and industry.

“The new work highlights the strong U.S. growth that would result from identifying currency manipulators and eliminating this unfair trade practice. With strong bipartisan support for addressing the issue in both the House and Senate, it is imperative that rules prohibiting currency manipulation are included in all future U.S. trade agreements.”

Dr. Laffer’s study can be found here. Key findings include:

  • Currency manipulation distorts the free market
  • “Persistent currency undervaluation has benefitted the currency manipulators at the expense of countries allowing the flexible adjustment of exchange rates.”
  • “The impact of currency manipulation has potentially dampened the U.S. current account by about 4 percent of GDP."
  • “It is likely that millions of jobs in the U.S. were lost as a result of current account imbalances that were generated, in part, by currency manipulation.”
  • “Unemployment rates in economies with undervalued currencies have stayed relatively low, while labor participation rates have risen in these countries compared to the U.S.”
  • “Since 1991, Japan has conducted official intervention in the foreign exchange market 376 times. Historically, heavy official Japanese intervention has prevailed since the 1970s in order to protect the competitiveness of its exports by curbing substantial yen appreciation.”
  • “The total size of Japan’s 2011 intervention was an astonishing 3 percent of nominal GDP.”
  • “Given the excess of foreign reserves, presence of a current account surplus, historical precedent, and significant policy changes over the past month, Japan appears to be falling back into its past practice of foisting much of the burden of its flawed policies onto its trade partners.”
  • The study supports AAPC's three-part test that would be an effective way to address currency manipulation in future free trade agreements. The test asks three key questions that if all are answered in the affirmative identify that country as a currency manipulator:
  1. Did the nation have a current account surplus over the six-month period in question?
  2. Did it add to its foreign exchange reserves over that same six-month period?
  3. Are its foreign exchange reserves more than sufficient (i.e., greater than three months normal imports)?”
  • “If TPP does not include such a currency discipline, it is reasonable to expect certain countries in the negotiations that have historically and repeatedly manipulated their currencies to continue to do so, with a profound negative impact on the U.S. economy and jobs market.”

The American Automotive Policy Council, Inc. (AAPC) is a Washington, D.C. association that represents the common public policy interests of its member companies Chrysler Group LLC, Ford Motor Company and General Motors Company