Wednesday, March 11, 2020

Currency manipulation rule making - creeping in slowly

Currency manipulation has always been on the sidelines of trade policy though not formally entering the multilateral trade agenda (yet!) nor leading to any WTO dispute. However, things may be slowly changing now.

A simplest way of defining currency manipulation is explained in this blogpost in the the Peterson Institute blog thus:
Currency manipulation is a widely cited but imperfectly understood concept. In brief, it occurs when a country intervenes in foreign exchange markets to artificially suppress the value of its currency in order to boost exports and curb imports. 
This blogpost outlines the internal dynamics of currency manipulation policy in the United States and how it plays out in framing appropriate policy tools to address perceived unfair trade practises. The United States Mexico Canada Agreement already provides for provisions related to currency manipulation though not of gold standards. A reference to disputes on currency manipulation to the dispute settlement mechanism or referral to the IMF in Chapter 5 of the US-China Trade Deal is also a significant development.

Are things hotting up for formalisation of currency manipulation rules in international trade negotiations or is this a one-off exception?

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