Feb 23, 2013

China - WTO may not be ideal platform to deal with currency issue

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BEIJING: The World Trade Organisation (WTO) may not be the ideal platform to deal with the issue of currency manipulation, according to Costa Rica's Foreign Trade Minister Anabel Gonzalez, who is in the running to be WTO Director-General.

She was in Beijing to meet Chinese authorities to garner their support.

As the global economy slows and countries scramble to boost exports, trade friction is likely to escalate.

That's particularly the case with the world's largest exporter and second largest trading nation -- China.

Competitors often point to China as unfairly subsidizing its exports via the undervalued yuan.

But Costa Rica's candidate for the top job at the WTO said the trade organization might not be equipped with the tools to tackle the issue.

Anabel Gonzalez said: "I would be cautious in terms of looking at it in the context of the WTO.

"This issue of exchange rates is normally associated with monetary policies, fiscal policies, financial policies, and in that regard I think there may be other venues that are better suited to deal with these issues, be it, meetings of central bankers, ministers of finance, the IMF, the G20."

In Beijing to gain support for her candidacy, Ms Gonzalez said China has achieved a huge transformation over the past decade.

However, trade reform is a long-term process. A recent report on China by the WTO noted a decrease in the number of state-owned enterprises. But still, a significant number of them remain, particularly in sectors regarded as vital to the national economy.

As China's goals change, placing priority on moving up the industrial value chain, liberalizing the market may take a backseat. For instance, state supported financing and cheap land may be seen as unfairly giving home-grown companies a leg up.

Costa Rica's foreign trade minister said: "Each country can, of course, decide what are the best actions and policy measures to continue to promote growth and development in its own country.

"From the perspective of WTO system, the important part is that this is done in a way that respects the rules and disciplines of the organization."

The Costa Rican is among nine candidates vying to succeed Pascal Lamy when he steps down as head of the WTO at the end of August.

- CNA/al

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