The late Raymond Vernon was fond of saying that Multinational Corporations are everywhere except in economic textbooks. In the same vein, I would say that currency manipulation is everywhere the talk of the day except in international trade law which is strangely silent on this issue.
In an interesting article, Peter Morici summarizes the present situation in two sentences:
Currency manipulation . . . is [one of ] the new devil's workshop of trade policy but the Doha Round agenda is silent on these issues. Instead negotiations are locked in a tussle over farm subsidies . . . Regarding exchange rates, the WTO defers to the IMF but the IMF has no power to act. Currency manipulation is not on the Doha Round agenda.
Since Doha is silent on this issue, one could turn to existing agreements to see what they have to offer. The answer is "not much." The only provision which seems to address directly this issue is Article XV:4 of GATT 1994 (an integral part of the WTO Agreement) which says that " Contracting parties shall not, by exchange action, frustrate the intent of the provisions of this Agreement." GATT contains an "Ad Note" which is not really helpful for defining the word "frustrate." It says only that there is no violation of this provision if, in practice, there is no appreciable departure from the intent of one of GATT 1994 Articles.
However, even this meager provision is qualified by Article XV:2 of GATT 1994 which requires the WTO to accept the Fund's determination on the consistency of a measure with the Fund's Articles, and Article XV:9(a) which states that the GATT does not preclude the use of exchange controls or exchange restrictions that are consistent with the Fund's Articles.
According to Siegel ( 96 AMJIL 561) , the plain meaning of these words leads to the fact that:
Even if WTO members considered that the trade effects of a measure brought it within the scope of the GATT, the fact that it was an exchange measure that was applied consistently with the Fund's Articles would mean that it could not be found to violate the GATT.
If Morici is right when he says that the IMF has no power to act, does this mean that ,concerning currency manipulation, international trade law is in a kind of egg and chicken issue? Moreover does this mean that all the talk about currency manipulation as an export subsidy is useless as long as the IMF does not find currency manipulation? It seems that the answer is "yes," at least if one concludes that the SCM carries forward implicitly Article XV of GATT 1994 and its implicit division of labor between WTO and IMF.
