From Paul Krugman:
China says that accusing it of subsidizing its exports via its exchange rate policy — and imposing a countervailing duty — would violate WTO rules. Hmm.
Before we talk legalese, let’s focus on the essentials. An export subsidy is WTO-illegal. An import tariff is WTO-illegal. A deliberately undervalued currency, maintained by massive foreign exchange intervention over a period of years, is in effect a combination of an export subsidy and an import tariff.
So how can China’s actions be legal, and a US response illegal? Well, the rules on currency manipulation are written in a confusing fashion, and seem to pass the buck or maybe the yuan — back and forth between the WTO and the IMF.
But I basically can’t believe that the fine points here can override the clear merits of the case. If China’s currency policy were two separate policies, the US would have every right to respond; arguing that by combining the policies China somehow acquires immunity is just too tricky.
In essence, he seems to be saying, "the rules may not cover this, but they should, so let's just make them apply here."
I can't decide whether his take on all this is blissfully ignorant about how law and legal interpretation actually works, or if it has great insight into how law and legal interpretation actually works. I suppose it depends on your view of how law and legal interpretation should work in these situations.