World News

WTO lacks expertise to examine currency valuations as trade issue: WTO chief

By Andrea Shalal

WASHINGTON (Reuters) – Trade is not a driving factor in determining currency rates around the world, and the Geneva-based World Trade Organization lacks the expertise to address the issue, the body’s director general, Roberto Azevedo, said on Tuesday.

Azevedo’s comments came a day after the U.S. Commerce Department finalized a new rule to impose anti-subsidy duties on products from countries it says undervalue their currencies against the dollar, including potentially China.

Asked if the U.S. move would violate WTO rules, Azevedo told a trade conference that while WTO had a working group on trade and finance, it was rare to see exchange rates being manipulated for trade gains, as U.S. officials have repeatedly argued in the case of China.

“Even though the WTO rules mention the issue of exchange rates … it’s very rare that you see exchange rate policy being driven by trade,” he told a conference hosted by the Washington International Trade Association (WITA).

“Most exchange rate values are determined on the basis of macroeconomic policies that include fiscal (and) monetary choices with goals that go way beyond the trade account,” he said, noting that this issue was monitored by the International Monetary Fund, central banks and other institutions.

“To expect that the WTO is going to fix this, that would be a bit ambitious, to place that on the shoulders of the organization. It was not built for that,” he said.

Azevedo told Reuters the WTO would examine whether the U.S. move was WTO-compliant if asked to do so by a member country. He said the WTO lacked the expertise to fully assess the factors that go into currency moves.

Mark Sobel, a former senior U.S. Treasury official and adviser to the London-based OMFIF economy policy think tank, said the new Commerce rule would likely be inconsistent with World Trade Organization rules.

“There is no precise way to measure currency undervaluation,” he said, adding that Commerce had no responsibility for or expertise in international monetary and currency matters. “This is a unilateral policy which will alienate countries around the world.”

In addition to China, the new rule also could put goods from other countries at risk of higher tariffs, including those from Germany, Ireland, Italy, Japan, Malaysia, Singapore, South Korea, Vietnam and Switzerland.

Those countries were all on the “monitoring list” included in the U.S. Treasury Department’s semi-annual currency report, which tracks currency market interventions, high global current account surpluses and high bilateral trade surpluses.

(Reporting by Andrea Shalal; Editing by Andrea Ricci)