By SEMA Washington, D.C., Staff
The U.S. Department of Commerce (DOC) issued a proposed rule that would allow countervailing duties to be imposed on countries that undervalue their currency relative to the U.S. dollar. The rule seeks to detail how the DOC “determines the existence of a benefit resulting from a subsidy in the form of currency undervaluation and clarify that companies in the traded goods sector of an economy can constitute a group of enterprises for purposes of determining whether a subsidy is specific.”
A countervailing subsidy is defined under U.S. law as a “financial contribution from a government or public entity that is specific and that provides a benefit to a foreign producer or exporter.” The DOC has issued the proposed rule since current law does not explicitly address currency manipulation whereby a country may devalue its currency to make exports less expensive for U.S. markets.
In related news, in its most recent report to the U.S. Congress, the U.S. Treasury did not identify any currency manipulators among America’s major trading partners although the currency practices for many countries are being monitored including China, Japan, South Korea, Germany and Vietnam. The criteria applied by the U.S. includes a country that has a trade surplus with the U.S. larger than $40 billion; has a large overall current account surplus; and persistently intervenes in its currency markets.
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