As promised, a further report from the World Trade Forum.
Among the highlights (there were many-congrats to Thomas Cottier and his team for a great meeting) was the debate on the WTO and the issue of currency manipulation to gain an advantage in trade. Particularly interesting were the diverse perspectives offered by members of the WTO Secretariat, speaking in their personal capacity and not on behalf of the Organization. As has been discussed here before, Article XV:4 of the GATT provides that WTO Members shall not frustrate the intent of the GATT through exchange action or the intent of the IMF Articles through trade action. Some have argued that this provision could be used to bring a claim against China for example, based on the notion that the Renminbi is undervalued in order to preserve the competitiveness of China's exports. Similar accusations have been levelled against Switzerland's current policy of establishing a fixed exchange rate for the Swiss Franc against the Euro.
One Secretariat official took the personal view that these are issues that should be left exclusively to the IMF, and even that (if I understood that person well) a panel might not have jurisdiction. Although the conference was not conducted under Chatham House rules in whole or in part, this individual invoked them on his behalf, and therefore I am not going to name the person-and, in fairness (despite their not invoking Chatham House) I will afford anonymity to others as well.
An additional point was that exchange action within the meaning of XV:4 might not include exchange rate policy but only the narrower classes of measures mentioned elsewhere in Article XV, exchange controls and restrictions. But a different person, also speaking on their own behalf and not that of the WTO, suggested that the language of XV:4 is quite broad and would not necessasrily be limited to these presumably narrower categories.
Finally, a third person pointed out (again speaking in their personal capacity) that the WTO dispute settlement organs have under the DSU exclusive competence and indeed, under compulsory jurisdiction, the duty to determine whether there is a violation of a provision of a covered agreement, which obviously includes the GATT. To my mind this is clearly correct: determining whether exchange actions frustrate the intent of the GATT is a matter of determining whether there is a violation of the GATT, and involves interpreting the GATT, and here the dispute settlement organs have jurisdiction and the IMF does not. A bigger issue (which I myself raised) is whether XV:4 is a stand-alone provision, or whether it applies only to measures that resemble Article XI quantitative restrictions but would be exempted through the operation of one or other exception to Article XI (in which case XV:4 would have an Article XX chapeau type function and would not be a stand-alone basis for findng a GATT violation.)
This being said among the participants of the conference (including the ones referred to above) the range of views on whether an action under Article XV against a WTO Member for currency manipulation could succeed on the merits ranged from agnosticism to extreme skepticism. In part this is because it is not easy to prove the trade effects of a given exchange rate policy. Showing that a currency is misaligned from a general economic policy point of view is not enough to prove that the intent of the GATT, an accord on trade in goods not macroeconomic policy coordination, has been frustrated (a point brilliantly developed by my colleague Al Sykes in recent work co-authored with Bob Staiger).
Previous caselaw on Article XV admittedly shows an attitude of abject deference to the IMF. But, read properly, Article XV only requires deference (understandably) on the issue of whether certain practices of WTO Members violate the IMF Articles (as opposed to WTO norms) and on statistical questions.
I have a sense that some in the WTO would simply like the currency manipulation issue to go away, as in the past was wished for about trade and environment, hence the interest in a mythology that it is a matter exclusively for a different international organization and/or inherently excluded from WTO dispute settlement. But, this is more wishful thinking than savvy judgment: as the India-Balance of Payments and the Turkey-Textiles cases illustrate some day a Member may very well decide to take the plunge and test the waters (perhaps Brazil, one participant conjectured). . .
