Existential Risks to the Global Trading System and the Problem of Currency Intervention as a Case Study
Society of International Economic Law (SIEL) Working Paper No. 2014/10
10 Pages Posted: 25 Jun 2014
Date Written: June 16, 2014
As countries seek to promote growth in the aftermath of the financial crisis, currency intervention has become more prevalent and distortions in exchange rates with their resulting imbalances in trade flows have prompted call for new initiatives to address them, including in the negotiations of the Trans-Pacific Partnership (TPP) and of the Transatlantic Trade and Investment Partnership (TTIP). Both economic and legal experts have brought new insight into the impact of currency intervention on trade and a fresh legal perspective on the application of the rules in the WTO against measures that frustrate the intent of the GATT/WTO agreements. This paper reviews the underlying legal and policy issues and provides possible language for inclusion in the TPP or TTIP, and eventually in the WTO, that would build on the existing disciplines in the WTO and IMF agreements by authorizing remedial action in the form of safeguard and countervailing duties in response to a finding of actionable currency intervention.
Keywords: financial crisis, currency intervention, exchange rates, trade, Trans-Pacific Partnership, TPP, Transatlantic Trade and Investment Partnership, TTIP, WTO,Currency manipulation, IMF
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