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The U.S. Commerce Department on Monday finalized a new rule to impose
anti-subsidy duties on products from countries that it has determined
undervalue their currencies against the dollar, including potentially China.
The move could provide a fresh irritant in U.S.-China trade talks just weeks
after the world’s two largest economies signed a Phase 1 trade agreement and
comes a day after Beijing accused Washington of spreading fear about the
fast-spreading coronavirus that originated in China.
In theory, the new rule would allow the
Commerce Department to impose duties on China, even though the U.S. Treasury
Department recently removed its designation of China as a currency manipulator
as part of the Phase 1 trade deal.
Commerce said it would generally rely on the
Treasury’s expertise in determining undervaluation, but the two processes could
come to different conclusions since they resulted from different statutes. The
draft rule was first published in May. It said it would only impose
countervailing duties on imports of specific products that both benefit from
countervailable subsidies and are found by the U.S. International Trade
Commission to injure U.S. industries. The rule would not result in the
application of such duties to all imports from a given country, because not all
such imports injure U.S. industries, it said. Commerce said the new rule was a
measured response to longstanding, bipartisan calls to use existing laws to
address unfair foreign currency practices, and was part of a broad push by the Trump
administration to crack down on trade imbalances. “The Trump Administration is
doing the right thing by confronting the problem head-on,” it said in a
statement. U.S. Commerce Secretary Wilbur Ross said the new rule marked another
important step intended to “level the playing field for American businesses and
workers.”
Mark Sobel, a former senior U.S. Treasury official, and adviser
to the London-based OMFIF economy policy think tank, said the new rule failed
to address many of the concerns raised after the draft rules were published in
May, and would likely be inconsistent with World Trade Organization rules.
“There is no precise way to measure currency undervaluation,” he said, adding
that Commerce had no responsibility or expertise in international monetary and
currency matters. “This is a unilateral policy that will alienate countries
around the world.” The Commerce Department said it would not normally include
monetary and related credit policy in determining whether a government had
acted to reduce the exchange rate of its currency to bolster its domestic
industry. In addition to China, the new rule also could put goods from other
countries at risk of higher tariffs, including Germany, Ireland, Italy, Japan,
Malaysia, Singapore, South Korea, Vietnam, and Switzerland. Those countries
were all on the “monitoring list” included in the Treasury Department’s
semi-annual currency report, which tracks currency market interventions, high
global current account surpluses, and high bilateral trade surpluses. The
department said its proposed rule would amend the normal countervailing duty
process to include new criteria for currency undervaluation, including a
finding of government action on the country’s exchange rate.
Reuters
