business & professional >> economy International Trade Boosts U.S. Economy I SHANGRI-LA AUTHENTIC CHINESE CUISINE MIDTOWN 4710 Cass Avenue Detroit, Michigan 48201 UPTOWN 6407 Orchard Lake Road (15 Mile & Orchard Lake) 313.974.7669 248.626.8585 DAILY DIM SUM &SUSHI DAILY DIM SUM uptownshangri-la.com 201,470 Thetar den Party FINE FOOD & WINE • CLASSIC CARS • CHARITY W Generous Donation VII M ade by FOUNDATION SUNDAY, JUNE 14 2015 VEADOW BROOK HALL 1:00 PV1-4:00 PV1 To benefit Macomb Community College Applied Technologies Programs and Oakland Community College Culinary Studies Institute. _1=11=1 FOOD COURTESY OF: Andiamo Italia Atwater in the Park Beverly Hills Grill Bill's Big Rock Chop House Cafe ML Café Via Coach Insignia Eddie Merlot's Joe Muer Seafood Detroit Kruse &Muer The Lark Mabel Gray Melting Pot Morton's The Steakhouse No. VI Chophouse & Lobster Bar Northern Lakes Seafood Company OCC Culinary Studies Institute Ocean Prime Redcoat Tavern Roadside B&G Roast The Root Restaurant & Bar Steve & Rocky's Streetside Seafood Tallulah Wine Bar & Bistro Town Tavern Trattoria Stella 9 For more information or to purchase tickets visit www.thegardenpartymichigan.org 2006870 40 May 28 • 2015 JN nternational trade contributes to higher incomes and stronger pro- ductivity growth in the United States and abroad. U.S. businesses enjoy greater access to overseas markets. American families enjoy a greater variety of choices and lower prices. Trade lowers costs through economies of scale by giving firms access to world markets. It also fos- ters competition by opening up domestic producers to foreign com- petition, and it enhances the flow of ideas, which drives innovation. Michigan is a major bene- ficiary of trade with the addi- tional benefit of being one of the top destinations for foreign-headquartered multi- national firms in the U.S. The benefits of trade are unevenly distributed, howev- er, and some people are nega- tively affected by increased global competition. For example, the textile industry in the U.S. has declined and workers lost their jobs because other countries have a comparative advantage in the production of textiles. Despite some negative consequences, expanded textile trade increases prosper- ity. American families benefit from the lower cost of imported textile products. Countries producing textiles obtain the resources to purchase goods from American companies. The gains from international trade increase living stan- dards for most workers, while providing the resources to help displaced workers. The U.S. is in the final stages of nego- tiating trade agreements with Asia, the Trans-Pacific Partnership (TPP), and with Europe, the Transatlantic Trade and Investment Partnership (TTIP). Congress is debating Trade Promotion Authority (TPA) that provides for an up or down vote on these agreements, without amendments, and thereby encourages our trade partners to put their best offers on the table. Michigan's Senators Debbie Stebanow and Gary Peters are leading an effort to add a currency manipulation clause to the TPA. A full page ad in the Detroit Free Press on April 22 paid for by Ford Motor Co. states "without strong and enforceable rules against currency manipulation in trade deals, foreign countries can tip the scales in their favor." The domestic auto industry is con- cerned that Japan is manipulating its currency (depreciating it against the dol- lar), giving Toyota, Honda and Nissan a competitive edge selling cars in the U.S. In similar fashion, the appreciation of the dollar against the Euro in the last six months gives BMW and Mercedes an advantage selling cars in the U.S. The auto industry has worldwide pro- duction capacity The foreign competitors have U.S. production facilities to hedge against currency fluctuation, while parts can still be sourced from overseas. One of the major issues in the negotiations with Japan is Tokyo's demand that the U.S. eliminate immediately its 2.5 percent tariff on auto parts imports. Washington's demand is that Japan substantially increase its imports of rice for consumer use. The domestic auto industry will lose a cost advantage; American rice farm- ers will gain access to a large market. Currency manipulation occurs when a government buys or sells foreign currency to push the exchange rate of its own currency away from market value or to prevent the exchange rate from moving toward its market value. However, it's important to note that many factors influence exchange rates, including monetary policy. It can be dif- ficult to distinguish between currency fluctuations arising from monetary policy and those driven by currency manipula- tion. Case in point: the U.S. monetary policy of Quantitative Easing had the side effect of depreciating the dollar, making U.S. exports cheaper and benefiting Ford Motor Co. when they exported cars from domestic factories. In a March 5 letter to the Congressional leadership, the 14 chairs of the President's Council of Economic Advisors under Presidents Ford, Carter, Reagan, Bush, Clinton, Bush and Obama addressed the issue of currency manipulation. The let- ter stated, "It is not desirable for trade agreements to include provisions aimed at so-called currency manipulation. This is because monetary policy affects the value of currencies. Attempts to penalize countries for supposedly manipulating exchange rates would thus impose con- straints on US. monetary policy, to the detriment of all Americans:' The trade agreements with Asia and Europe will increase U.S. economic growth with net benefits to American businesses, families and workers. Currency manipulation issues should not be permitted to stand in the way of economic progress. ❑ Jonathan Silberman is a professor of econom- ics at Oakland University. You can contact him at silberma@oakland.edu.