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US-Japan Trade Talks: Not Worth Losing American Jobs

Japanese Prime Minister Shinzo Abe
Stringer | AFP | Getty Images
Japanese Prime Minister Shinzo Abe

President Barack Obama welcomed Japanese Prime Minister Shinzo Abe to the Oval Office on Friday with open arms, and perhaps with promises of more open trade between the two nations. In addition to a full agenda of national security issues, ranging from the North Korean missile tests to Japan's territorial dispute with China over the Senkaku Islands, the leaders of two economic powerhouse nations addressed the open question of Japan's involvement in the Trans-Pacific Partnership.

Will Japan join the 11 countries negotiating this much anticipated trade agreement?

The answer to this question could shape the entire regional economy for decades to come, and President Obama is keen to bring Tokyo into the fold. Japan maintains the world's third largest economy and our two countries have political and military ties that reach back to the post-war era.

After all, trade is a good thing. Given a level playing field, American companies can compete in any market. And the Japanese market is a lucrative one. Fewer than four percent of all autos sold in Japan last year were made by non-Japanese manufacturers. And yet we see plenty of Nissans, Toyotas, and Hondas on the streets of Detroit.

We should welcome and encourage Japan's interest in freer trade.

But let's not roll out the red carpet for TPP's arrival just yet.


Abe is the seventh Prime Minister of Japan in six years, so it might come as no surprise that his government's plan to boost Japan's stagnant economy is designed to play well at home.

To that end the Abe administration has proposed managed inflation and quantitative easing, monetary policies that amount to currency manipulation. A weaker yen is a tool Japan has often relied upon to push down imports and boost exports.

(Read More: Japan's Leader Will Plug 'Abenomics' in Washington)

So, if and when Japan sits down to talk about a lucrative TPP deal, American workers and corporate executives alike will be watching closely to see if the path forward is based on reciprocity and a shared understanding of market-based currency disciplines. This should include specific commitments to eliminate currency manipulation among TPP countries along with other non-tariff barriers that place American products at a disadvantage in foreign markets.

Put simply, the practice of currency manipulation by a major trading partner, such as Japan, acts as a subsidy for their products entering our market and as a tax on our exports to their market. In fact, the value of the yen has slumped more than any other currency in the last three months, down 8 percent against the dollar since Abe took office.

Manufacturing has been one of the few bright spots in our stagnant recovery, with the sector gaining more than 500,000 jobs since January 2010. And the president wants to add one million more of them by the end of his second term.

But nothing can erode the benefits of more open trade, or stop a manufacturing recovery faster, than predatory currency manipulation. America – with its massive consumer market and strengthening economy – has a lot at stake in the TPP negotiations. If Japan wants to join in, the U.S. should ensure that currency issues are strongly and clearly addressed with enforceable rules to penalize such action in the future.

So far, the Administration's response to these real concerns has been inadequate. Relying on goodwill and promises from our trading partners shouldn't be enough to pass muster. Either binding commitments – subject to a withdrawal of trade benefits – must be included in the TPP, or the agreement should be shelved.

It's not worth sacrificing American jobs and American manufacturing to secure an agreement at any cost.

(Read More: This Time Around, Abe May Prove He's Got It Right)

Scott N. Paul is President of the Alliance for American Manufacturing (AAM), a partnership established in 2007 by some of America's leading manufacturers and the United Steelworkers union. Mr. Paul and AAM have worked to make American manufacturing a top-of-mind issue for voters and our national leaders through effective advocacy, innovative research, and a savvy public relations strategy.