‘Alienate countries around the world’: Washington pushes ahead with plan to punish ‘currency manipulation’

The US Department of Commerce has finalized new rules to impose anti-subsidy duties on products from countries that it has determined undervalue their currencies against the dollar.

The rules would target China and allow for new tariffs to be imposed on Beijing, despite the fact that the US Treasury Department last month removed China from its list of currency manipulators as part of the Phase 1 trade deal.

In addition to China, the rules could put goods from other countries at risk of higher duties. Countries which could be affected include Germany, Ireland, Italy, Japan, Malaysia, Singapore, South Korea, Vietnam, and Switzerland. They were all listed on the Treasury Department’s “monitoring list” which tracks currency market interventions, high global current account surpluses, and high bilateral trade surpluses.

The Department of Commerce said the new rules were a measured response to unfair foreign currency practices and part of a broad push by the Trump administration to crack down on trade imbalances.

It marked another important step intended to “level the playing field for American businesses and workers,” according to the US Commerce Secretary Wilbur Ross.

The department said it would only impose countervailing duties on imports of specific products that both benefit from countervailable subsidies and are found by the US International Trade Commission to injure US industries; that would not result in the application of such duties to all imports from a given country, it explained.

Meanwhile, Mark Sobel, a former senior US Treasury official and adviser to the London-based Official Monetary and Financial Institutions Forum, an economy policy think tank, said the new rules failed to address many of the concerns raised after the draft rules were published in May.

He also said it would likely be inconsistent with the WTO rules.“There is no precise way to measure currency undervaluation,” Sobel said as quoted by Reuters. He added that the Department of Commerce had no responsibility or expertise in international monetary and currency matters. “This is a unilateral policy which will alienate countries around the world.”

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