Friday, February 27, 2004

BUSH ADMIN AGAIN BALKS AT CONFRONTING CHINA


Where political channels have failed to successfully pressure the Bush administration to take action against unfair trade practices in China (currency manipulation, human rights violations, failure to meet WTO commitments, and so on), many are looking to alternative legal channels. A Number of groups have legal suits on deck to be filed with the US Trade Representatives office seeking remedy for unfair trade practices.

Seeking to pre-empt such a suit, the US Trade Representative Robert Zoellick remarked yesterday at a press briefing, "There's really no WTO obligation not to have a fixed exchange rate," which would seem to obviate any kind of trade remedy action against China in the WTO.

Perhaps. But China's continued currency manipulation is in violation of its commitments under the IMF Articles of Agreement:

Article IV, Section 1.iii clearly states: "Recognizing that the essential purpose of the international monetary system is to provide a framework that facilitates the exchange of goods, services, and capital among countries, and that sustains sound economic growth, and that a principal objective is the continuing development of the orderly underlying conditions that are necessary for financial and economic stability, each member undertakes to collaborate with the Fund and other members to assure orderly exchange arrangements and to promote a stable system of exchange rates. In particular, each member shall...avoid manipulating exchange rates or the international monetary system in order to prevent effective balance of payments adjustment or to gain an unfair competitive advantage over other members." (Emphasis added).

The IMF charter could not be more clear in recognizing how such currency manipulation constitutes an unfair trade practice, which China is bound not to do.

The question of appropriates venue for legal action aside, China is violating international economic agreements to gain unfair competitive advantage--at the expense of the United States, as well as other developing countries who compete for a share of the US market.

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