In 2007, Obama backed curbs on currency manipulation; now he’s threatening a veto

For opponents of President Barack Obama’s trade plans, it’s a classic case of an old refrain: He was for it before he was against it.

Obama says he will veto any fast-track trade bill that would punish China for manipulating its currency.

But as a U.S. senator in 2007, he thought it was a good idea.

When President George W. Bush asked Congress to pass a fast-track bill, Obama wrote a letter to the Treasury Department, saying the Bush administration’s refusal to take action against China’s currency manipulation would make it more difficult for Congress to approve the request.

"Treasury’s refusal even to acknowledge the costs of Chinese currency manipulation justifies the fear of many Americans that this administration lacks the will to stand up against trade abuses and labor or environmental violations that create an unfair playing field for American workers," Obama wrote.

Under a fast-track bill that the Senate could vote on Thursday, Congress would set the rules of debate for the proposed Trans-Pacific Partnership, a 12-nation trade pact. If it’s approved, members could not filibuster or amend the trade agreement once it’s negotiated and submitted for approval.

Many members of Congress want the administration to get tougher on currency manipulation, saying it gives foreign countries an unfair advantage by making it cheaper for them to export their products to the United States.

The White House says no currency manipulation language is needed in the bill and that it would be regarded as a poison pill that would kill the legislation.

At the White House on Tuesday, Press Secretary Josh Earnest said the administration has already done a good job advocating for fair currency policies in multilateral meetings.

"And we have had some success when it comes to China," he said. " Their currency has appreciated about 30 percent over the last five years or so. That’s an indication that the advocacy of American officials has been effective.”

Here’s the full text of Obama’s 2007 letter:

Dear Secretary Paulson,

The People's Republic of China has manipulated its currency for years in order to gain an unfair advantage over the United States in trade. Unfortunately, the Administration has failed to effectively challenge or change China's behavior. And today, the Department of the Treasury has refused yet again to declare that China is manipulating its currency. I call on the Treasury Department to reconsider today's decision.

Your department's refusal to take action against China raises serious questions about the Administration's commitment to protecting the interests of American businesses and American workers. At least partially as a result of the Administration's failure to address Chinese currency manipulation, the U.S. imported more than $232 billion in goods from China than we sold to it last year. That constitutes an annual growth in the imbalance in trade of 73 percent.

Refusing to acknowledge the problem will not make it go away. As a result, I will work with colleagues in the Congress to force action and strengthen the ability of Americans losing out from Chinese currency manipulation to bring forward complaints for remedy through increased duties on Chinese goods.

The Administration's refusal to take strong action against China's currency manipulation will also make it more difficult to obtain congressional approval for renewed Trade Promotion Authority, as well as additional trade agreements. Treasury's refusal even to acknowledge the costs of Chinese currency manipulation, justifies the fear of many Americans that this Administration lacks the will to stand up against trade abuses and labor or environmental violations that create an unfair playing field for American workers.

As a result, I will work with my colleagues in the Senate to ensure that any trade agreement brought before the Congress is measured not against Administration commitments but instead against the rights of Americans to protection from unfair trade practices including currency manipulation and the violation of international labor and environmental standards.

Again, I urge you to reconsider today's decision not to take action against China for currency manipulation. Thank you.


Barack Obama

United States Senator