Just when you thought China's dwindling trade surplus was going to alleviate trade tensions (at least according to the Financial Times), newly installed US Trade Representative Ron Kirk is suggesting things may not be that hunky-dory. Not so fast, buster. For reasons I should give pretty soon, there is virtually no ground for the US to cite China as being inconsistent with its WTO obligations lest it put the WTO's very existence at risk. But, given the sour mood in Washington, you'd better not count against some action being lodged altogether if things get worse and a convenient scapegoat becomes necessary--namely, those dratted furriners. From Reuters:
The United States will examine whether China's currency practices are consistent with Beijing's obligations under the World Trade Organization, U.S. Trade Representative-designee Ron Kirk said on Thursday.I'm dying for some action here.
In written responses to the Senate Finance Committee, Kirk declined to say whether China is "manipulating" its currency as President Barack Obama said during last year's campaign. But he said the Obama administration would "develop a comprehensive and integrated policy to address the full range of China's trade policies that impact the United States."
"As part of this comprehensive effort, of course, we will need to review China's actions for consistency with its WTO obligations," Kirk said in response to questions from a number of senators about China's exchange rate practices.