Industry Group Attacking Strong Dollar Problems
James A. Morrissey, Washington Correspondent
Textile manufacturers have joined a broad-based coalition of labor industry and agriculture interests who have launched a campaign against the strong dollar, which, they say, is raising havoc in international trade. The Sound Dollar Caucus includes more than 40 trade associations representing: textiles and textile machinery, steel, automobiles, paper and other forest products, cotton, the AFL-CIO, and a wide range of other manufacturing industries.The U.S. dollar, which is at a 16-year high, has the practical effect of making imports cheaper and raising the price tags on American-made products abroad.The American Textile Manufacturers Institute (ATMI), one of the founders of the Sound Dollar Caucus, blames devalued Asian currencies and U.S. strong dollar policies for many of its current economic woes. ATMI says that in the late 90s, the currencies of almost all the major textile-exporting countries were devalued, causing a "shock wave of artificially low-priced textile and apparel products to hit the United States."While the strong dollar obviously is causing problems, Secretary of the Treasury Paul H. ONeil has stoutly defended the administrations currency policies. He says that well-managed companies can deal with the strength of the dollar, and there is an underlying fear that a weaker dollar would rekindle inflation.With the administrations heels dug in, the dollar caucus has turned to Capitol Hill for help. Members of Congress have formed their own Sound Dollar Caucus, and while they are concerned about the problem, no one seems to have a simple or specific solution. One avenue appears to be something known as the "Plaza Accord," which President Ronald Reagans Treasury Secretary James Baker negotiated in the mid-1980s when the currency imbalance was about the same as it is today. Baker met with the financial ministers of a number of major trading nations, and they agreed to take steps to bring their currencies into a better alignment with the dollar. While that effort was successful, it is uncertain if or when the Bush administration would be willing to undertake such a venture.