WASHINGTON — A number of countries — China most prominent among them — have long acted to hold down the value of their currencies against the dollar, helping their industries by keeping exports to American consumers cheaper and making goods from the United States more expensive.
And while every president from Bill Clinton on has repeatedly criticized the practice, none have ever taken formal action against China or any other nation to try to stop it.
Now, a growing bipartisan majority in Congress is coalescing around a demand that could derail President Obama’s ambitious trade agenda before it really gets moving: include a robust attack on international currency manipulation or no deal.
The push for strong currency provisions — in legislation to grant the president “fast track” trade negotiating authority, in a major trade deal with a dozen Pacific Rim countries, or in both — has presented the White House with what it fears is something of a Catch-22.
If members of Congress are to be believed, unless the president’s trade negotiator includes strict, enforceable prohibitions on policies to intentionally hold down the value of currencies, any completed trade accord will die on Capitol Hill. But, administration officials say, demanding the inclusion of such prohibitions would kill the trade deals before they were completed.
“You cannot be pro trade and pro this kind of currency mechanism,” warned Tony Fratto, a former official in the George W. Bush administration who is working against the congressional currency push. “They are completely incompatible. It will in fact kill a deal.”
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“Treasury needs to figure out what kind of flexibility it needs to manage the economy,” said Tom Linebarger, chairman and chief executive of Cummins, the diesel engine giant, who is heading the trade push for the Business Roundtable, which includes dozens of chief executives from major corporations.
Lawmakers in both parties are not buying it. Mr. Schumer said he had advised the White House to embrace currency protection legislation now, either as part of the bill granting Mr. Obama trade promotion authority or as a stand-alone bill that would move with the Trans-Pacific Partnership. That way, the currency issue would subside before the partnership comes before Congress.
Mr. Schumer said Congress did not “have the votes” for a plain Trans-Pacific Partnership or for granting trade promotion authority.
“They actually might need it to happen,” he said.
Keith Bradsher contributed reporting from Hong Kong.
