US
Says Major Trading Partners Not Manipulating Currency
October 30, 2003
The
Bush administration says neither China nor any other major
US trading partner manipulated exchange rates in the first
half of 2003 to gain unfair trade advantages, although some
of them used pegged exchange rates or intervened in foreign
exchange markets.
In
an October 30 report to Congress on international economic
and exchange rate policies, the Treasury Department said that
China's policy of keeping its currency linked to the US dollar
did not meet the currency manipulation criteria laid out in
a 1988 law that also provides for possible economic sanctions.
The
report's assessment of China's currency exchange policy has
been eagerly awaited by US manufacturers and their advocates
in Congress. These groups view China's currency peg to the
US dollar as a major source of that country's huge trade surplus
with the United States and a major reason for the massive
job loses in the US manufacturing industry. They have reportedly
claimed that China's currency could be undervalued by as much
as 40 percent, making Chinese products significantly cheaper
on the US market and US products more expensive in China.
Despite
the report's findings absolving China from currency manipulation
charges, US Treasury Secretary John Snow, in testimony October
30 before a Senate committee, vowed to continue to pressure
the Chinese leadership to reenergize its efforts to move to
a flexible exchange rate.
The
report also said that interventions in the currency markets
by the Japanese government to prevent the yen from appreciating
and thus eroding the price-competitiveness of Japanese products
in foreign markets amounted to $59 billion in the first half
of 2003.
In
addition to China and Japan, the report covers Canada, Argentina,
Mexico, Brazil, the euro area, Russia, Korea, Taiwan, Malaysia
as well as Central Europe, Africa, and Middle East and South
Asia.
The
Treasury report said that the administration "strongly"
believes that a system of flexible market-based exchange rates
is best for major US trading partners.
It
noted that the move by many countries over the past several
years to adopt flexible exchange rates has been a "notable"
trend.
Following
is the text of Report to Congress on International Economic
and Exchange Rate Policies >>>
|
