S&P 500 Analysis & ETF Trading

[kiy]

FREE Trade Zones are the Future and a common currency will follow

Currency Rules Sought in Pacific-Trade Deal
http://www.bloomberg.com/news/2013-07-23/currency-rules-sought-in-pacific-trade-deal-by-automakers.html

A trade pact among Pacific-region nations should include provisions to prevent currency manipulation, Representative Sander Levin said, siding with U.S.-based automakers in expressing concern about Japan’s economic policies as the nation formally joins the talks.
“We need an enforceable obligation to avoid manipulating exchange rates,” Levin of Michigan, the top Democrat on the House Ways & Means Committee, said today in prepared remarks for a speech in Washington.
Enlarge image Currency Rules Sought in Pacific-Trade Deal by U.S. Automakers
The provision is part of a broader plan Levin unveiled to encourage Japan to open its auto sector to more foreign competition.
Japan today joins 11 nations working to create the Trans-Pacific Partnership, a free-trade zone that would link an area with about $26 trillion in annual economic output. The American Automotive Policy Council, an industry group that represents Ford Motor Co. (F), General Motors Co. (GM) and Chrysler Group LLC, has said it won’t support the TPP unless it contains a currency provision.
“A standard free-trade agreement with Japan will reward them with nearly $1 billion in annual tariff savings and allow for a massive loophole to remain in place by not preventing currency manipulation,” Matt Blunt, president of the U.S. industry group, said in a July 2 statement.
Abe Policies
U.S. automakers have said Japan’s market remains too closed to imports and that policies by Prime Minister Shinzo Abe’s government have weakened the yen, giving Japanese exporters an unfair advantage over foreign competitors.
The yen, trading at 99.86 per U.S. dollar at 10:38 a.m. in New York, has declined 21.37 percent against the dollar during the past year.
While the U.S. Treasury Department hasn’t labeled Japan a currency manipulator, it has called on the government in Tokyo to refrain from devaluing the yen for competitive reasons.
“They’re not manipulating their exchange rate,” Federal Reserve Chairman Ben Bernanke said of Japan in testimony before the House Financial Services Committee on July 17. “What they’re doing is engaging in strong domestic monetary policy measures, trying to break the deflation that they’ve had for about 15 years. And a side effect of that is that the yen has weakened.”
Bernanke said it was in the U.S. interest to see Japan’s economy improve.
Levin has said an April plan between the U.S. and Japan -- which would phase out U.S. tariffs on Japanese autos and expedite Japanese certification of U.S. vehicles -- doesn’t include enough specifics to ensure the Asian nation will open its markets to foreign auto imports.
He said the elimination of U.S. tariffs should be tied to Japan opening its auto markets and that the TPP accord should address future trade barriers.
Other nations negotiating the pact are Australia, Brunei, Canada, Chile, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam.

Free Trade Zones