Multilateral action and currency manipulation

A recent op-ed carried in the Peterson Institute for International Economics website by Robert Zoellick in the context of the next WTO chief raises 5 agenda items for the new DG to address. While I am not dwelling into all of them, the last one struck me as particularly interesting:

"Finally, will you agree to launch a discussion with the International Monetary Fund (IMF) about the application of the existing WTO and IMF rules requiring that exchange rates shall not be manipulated to gain unfair trade advantage? Given the extraordinary monetary policies spawned by the financial crisis—and the risks of competitive devaluations of currencies—multilateral bodies should not abdicate responsibility on these questions. If multilateralism fails, unilateralism may prevail. Brazil has already urged the WTO to discuss these questions."

I have blogged about the issue of currency manipulation and WTO rules compatibility here, here, here and here. Is this gradually finding its way to the centre stage in the discourse in international trade law and policy? What are the implications of this for monetary policy domestic space, interpretation of international trade rules and jurisdiction of international institutions? Complex questions with no easy answers.

Currency undervaluation - Simmering tensions

I have blogged about the issue of currency undervaluation and international trade here and here. 

Robert Zoellick in a recent piece titled "A New US International Economic Strategy" outlining what he thinks should be the international economic strategy of the US brought to the fore the increasing possibility of currency misalignment as one of the most contentious issues in the coming years for international trade.

"...the extraordinary monetary policies of late, led by the Federal Reserve's continued near-zero interest-rate policy, are taking us into uncharted territory. Central banks have tried most every tool to stimulate growth; if Japan is any warning, the next tactic is competitive devaluation, which risks a new protectionism. "Currency manipulation" could become a danger that reaches far beyond the debate about Chinese policies. The world economy will need at some point to withdraw the drug of cheap money and negative real interest rates. The United States should anticipate these dangers. 

The International Monetary Fund (IMF) also could help set standards about exchange-rate policies and serve as a referee that blows a whistle, even if it cannot penalize. The IMF and the World Trade Organization (WTO) should anticipate this risk and give effect to the existing WTO agreement that economies must "avoid manipulating exchange rates... to gain an unfair competitive advantage."

How can the existing WTO agreement be given "effect" to? Probably by a dispute settlement proceeding? Are we increasingly looking at such a possibility?