WASHINGTON (MaceNews) – The U.S. Treasury Department, in its latest evaluation of whether other countries use foreign exchange as a means to boost its competitiveness in trade under criteria set by two different laws, gave China and every other country a pass, but added to its list of countries it closely monitors. The summary of findings follows:
Summary of Findings
Pursuant to the 2015 Act, Treasury finds that Taiwan, Vietnam, and Switzerland met all three criteria in the current review period of the four quarters through December 2020 based on the most recent available data. Additionally, ten major trading partners met two of the three criteria for enhanced analysis under the 2015 Act in this Report or in the December 2020 Report. Further, one major trading partner, China, constitutes a disproportionate share of the overall U.S. trade deficit. Eleven economies — China, Japan, Korea, Germany, Ireland, Italy, India, Malaysia, Singapore, Thailand, and Mexico — constitute Treasury’s Monitoring List.
• China has met one of the three criteria in every Report since the October 2016 Report, having a significant bilateral trade surplus with the United States, with this surplus accounting for a disproportionate share of the overall U.S. trade deficit.
• Japan and Germany have met two of the three criteria in every Report since the April 2016 Report (the initial Report based on the 2015 Act), having material current account surpluses combined with significant bilateral trade surpluses with the United States.
• Korea has met two of the three criteria in every Report since April 2016 except for the May 2019 Report, having a material current account surplus and a significant bilateral trade surplus with the United States. While Korea’s bilateral trade surplus with the United States briefly dipped below the threshold in 2018, it rose back above the threshold in 2019.
• Italy and Malaysia have met two of the three criteria since the May 2019 Report, having a material current account surplus and a significant bilateral trade surplus with the United States.
• Singapore has met two of the three criteria since the May 2019 Report, having a material current account surplus and engaged in persistent, one-sided intervention in the foreign exchange market.
• Switzerland met two of the three criteria in the January 2020 Report, having a material current account surplus and a significant bilateral trade surplus with the United States. Switzerland previously was included on the Monitoring List in every Report between October 2016 and October 2018, having a material current account surplus and engaged in persistent, one-sided intervention in the foreign exchange market. Switzerland met all three of the criteria in this Report and the December 2020 Report.
• Thailand met two of the three criteria in this Report, having a material current account surplus and a significant bilateral trade surplus with the United States.
• Vietnam met two of the three criteria in the May 2019 Report, having a material current account surplus and a significant bilateral trade surplus with the United States, and met one of the three criteria in the January 2020 Report, having a significant bilateral trade surplus with the United States. Vietnam met all three of the criteria in this Report and the December 2020 Report.
• India met two of the three criteria in this Report, having a material current account surplus and engaging in persistent, one-sided intervention over the reporting period.
• Mexico met two of the three criteria in this Report, having a material current account surplus and a significant bilateral trade surplus with the United States. This is Mexico’s first inclusion in the Monitoring List and its first inclusion in a Report since October 2015.
• Ireland met two of the three criteria for the first time since the May 2019 Report and thus is included again in the Monitoring List.
• Taiwan met two of the three criteria in the December 2020 Report, having a material current account surplus and a significant bilateral trade surplus with the United States. Taiwan met all three of the criteria in this Report.
Treasury will closely monitor and assess the economic trends and foreign exchange policies of each of these economies.
Further, in this Report, Treasury has determined that there is insufficient evidence to make a finding that Vietnam, Switzerland, or Taiwan manipulates their respective exchange rates for either of the purposes referenced in the 1988 Act, though Treasury considers that its enhanced engagements with Switzerland and Vietnam may enable it to determine whether either of these economies did so. Additionally, Treasury expects that that engagement with Taiwan will help it to make the determination required under the 1988 Act for the period of review. Treasury has also concluded that no major trading partner of the United States on the Monitoring List has met the standards identified in Section 3004 of the 1988 Act.
As the global economy continues to stabilize, it is critical that key economies adopt policies that allow for a narrowing of excessive surpluses and deficits. Heightened risks of economic scarring further underscore the need for governments to bolster domestic-led rather than externally supported growth. This would establish a firmer foundation for strong, balanced growth across the global economy.
—
Content may appear first or exclusively on the Mace News premium service. For real-time delivery in entirety contact tony@macenews.com. Twitter headlines @macenewsmacro.