Hillary Clinton is between a rock and a hard place on trade.
On one side, she has her former boss the president and her history promoting his trade agenda as secretary of state. On the other side, she has a majority of congressional Democrats and a restive liberal base who want to kill the White House’ new trade treaty with a dozen Pacific-rim countries, known as the Trans-Pacific Partnership (TPP).
Clinton is in the middle: Stuck between her past ties to President Obama and her husband — who promoted free trade agreements — and her future as the party’s aspiring leader.
The former secretary of state has followed Obama’s lead on most policy issues, and seems likely to do so again here. “I haven’t seen anything to suggest any distance” on trade, White House spokesperson Eric Schultz told reporters Wednesday. But her stance on an esoteric policy issue buried in the Clinton campaign’s recent statement on trade caught the attention of some liberal wonks, who see it as a potential escape hatch for Clinton to oppose the treaty down the road.
International negotiators have not yet hammered out final details of the TPP, and text is not public, so Clinton has so far taken a wait-and-see approach. “Any trade deal has to create jobs and raise wages. It has to be a partnership between our business, our government, and our work force,” she said in New Hampshire on Tuesday.
But in a more detailed statement last week, her campaign said she “will be watching closely to see what is being done to crack down on currency manipulation.”
Those two words — currency manipulation — could determine how Clinton comes down on the first big fight of the 2016 Democratic primary, and radically alter her relationship with both the leadership in the White House and grassroots base of her party.
The issue of currency manipulation, when countries artificially devalue their currency in order to boost exports, has now become the frontline in the fight inside the Democratic party on TPP. A bipartisan group of lawmakers on the fence want it, but the administration has suggested the issue is a non-starter.
While many Democrats oppose the treaty outright, a number of others are still open to supporting TPP, but are holding out for a better deal. Currency manipulation has become perhaps the key sweetener they’re seeking.
“I’m deeply skeptical of trade deals in general,” Sen. Chuck Schumer told msnbc’s Chris Matthews Wednesday evening. “The only way they can get a number of Democrats is by getting a strong, real currency bill.”
“If we don’t do currency, we’re turning over our economy to the Chinese,” added Schumer, Clinton’s fellow New Yorker.
Currency manipulation, especially when practiced by big countries like China, can hurt U.S. manufacturing. It’s illegal under existing international law, but difficult to enforce.
"Without strong currency enforcement, it will not have my vote," Sen. Debbie Stabenow told Reuters. Stabenow’s home state of Michigan is home to the three big U.S. automakers, and she has repeatedly pressed administration officials in hearings on the issue.
Sen. Rob Portman, a Republican from Ohio, has signed on to Stabenow’s legislation, and could provide bipartisan cover to Democrats who may side against the larger trade deal over currency manipulation. Democrat Sherrod Brown, the other senator from the key presidential battleground state, has been leading his own charge on currency.
And the Senate Finance Committee late Wednesday unanimously adopted a measure from Sens. Michael Bennet and Tom Carper on currency manipulation.
Outside progressive economists, meanwhile, have argued that cracking down on currency manipulation could create million of jobs.
But the Obama administration has had little appetite for the issue, saying it would imperil the overall treaty.
“Seeking enforceable currency provisions would likely derail the conclusion of the TPP given the deep reservations held by our trading partners,” Treasury Secretary Jack Lew wrote in a letter to lawmakers Tuesday. "While the desirability of including currency manipulation in trade agreements can be debated, as a practical matter, it is impossible.”
With this dynamic in mind, some anti-TPP activists were surprised to see Clinton emphasize currency manipulation in a statement put out by her campaign last week. And when White House spokesperson Schultz said Clinton was on the same page as Obama, he did not mention the issue. “I believe that if you look at the points that are being raised in terms of human rights, environmental protections, labor protections, that those are important priorities of this president. So I haven’t seen anything to suggest any distance,” he said.
The unlikelihood that a currency crackdown provision appears in the final trade deal, coupled with Clinton’s apparent demand for such a provision, would seem to create an opening for the former secretary of state to oppose TPP.
Clinton did, however, specify how strong a currency provision needs to be to earn her support. The “fast-track” deal struck by congressional negotiators last week does include a currency provision. But it has so far failed to assuage any of the lawmakers demanding a currency crackdown, who said it is unenforceable.
“It’s a very generic clause that says countries should not manipulate their currency for commercial advantage,” said trade expert Robert Scott of the liberal Economic Policy Institute. “It has no teeth."
“She's touching the right bases,” Scott said of Clinton’s stance on trade. “It's a good sign. Whether at the end of the day, she holds the agreement to a high bar or not, that's another question.”
Already, her potential opponents are taking shots at Clinton on trade
Today, former Democratic Gov. Martin O’Malley sent a fundraising letter to supporters with the subject line “Hard Choice” — a reference to Clinton’s 2014 book of the same title. “Nope. To me, opposing bad trade deals like TPP is just common sense,” O’Malley continued.
Sen. Bernie Sanders, another potential primary challenger, tried to hold up the fast-track bill in the Senate through procedural means, and last week called on Clinton to take a stand on TPP. And Sen. Elizabeth Warren further hardened the battle lines by going after Obama on trade.
Meanwhile, Republican presidential front-runner Jeb Bush accused Clinton of flip-flopping on trade.
And opposing the TPP treaty itself might not be enough to win over liberals. They would prefer her to oppose the congressional fast-track authority, which would allow for an up-or-down vote on the trade deal. Without fast-track, Congress is unlikely to approve TPP.
“It's the first pass/fail test of whether Secretary Clinton is just going to talk the talk or actually walk the walk” on economic populism, said Murshed Zaheed of Credo Action, a liberal group. “If she steps out and says that she's against fast track it would appear as genuine to us. It would mean that she was stepping up at a key moment. And it would thwart the momentum the Obama administration and Republican leaders are desperately trying to gin up.”
For now, they will have to wait and see — just like Clinton.