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Money News

Leave currency surveillance to IMF - WTO head

The World Trade Organization (WTO) chief Pascal Lamy is seen in Mexico City, in this March 23, 2007 file photo. REUTERS/Henry Romero

WASHINGTON (Reuters) - The World Trade Organization should not take on the job of deciding whether China or any other country is following an appropriate currency policy, the head of the WTO said on Monday.

“This is something for the IMF (International Monetary Fund) and I would prefer this be left to them,” WTO Director General Pascal Lamy said in a speech at Georgetown University’s law school on the WTO’s “surveillance” role in ensuring countries honor their trade commitments.

Many members of the U.S. Congress would like to see the WTO play a more active role in currency issues because they believe China deliberately undervalues its currency by as much as 40 percent to give its companies an unfair trade advantage.

Certain articles of the WTO prohibit members from using currency policy to negate commitments to open their markets. But since no country has ever filed a complaint in that area, “it’s untested, uncharted territory” for the WTO, Lamy said in response to a question on whether the world trade body should monitor the currency practices of its members.

The Bush administration has faced pressure from Congress, including possible legislation, to bring a case against China’s currency policy at the WTO, but it has resisted taking that step.

Lamy said he would not express an opinion on the merits of a possible U.S. complaint against China because as WTO director general he has to remain neutral in all disputes.

It’s possible a currency case against China would severely strain the WTO’s dispute settlement system because of Beijing’s view that its currency practices are its own business.

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