˝Korea-China-Japan-Taiwan˝ Accused of Currency Practices

U.S. House of Representatives labeled 4 Asian nations, South Korea, China, Japan and Taiwan (local time) as countries that distort currencies yesterday and submitted a resolution to the administration that urges all necessary measures to correct the wrongs.

Pundits believe the resolution is likely to be adopted as the there are raising voices demanding hard line trade diplomacy in the U.S. administration and Congress since the collapse of the WTO ministers meeting in Cancun.

The resolution argues that currency practices of the four Asian nations are one of the main causes that has made the U.S. lose 2.7 million jobs in manufacturing industry since 2000 summer, The Wall Street Journal reported yesterday.

The resolution mentions Chinese yuan specifically, but the resolution is likely to press South Korea as well.

Although the four nations were recently accused of distorting currencies by the U.S. Industry Association, it is the first move for the U.S. Congress, since mid 1990, to label them as currency manipulating countries.

˝Because of the currency practices of Asian countries, export goods of Asian nations could have taken unfair advantage of 15 to 50% of price competitiveness in the U.S. market,˝ said House Small Business Chairman Don Manzullo.

Besides it, the U.S. National Association of Manufacturers is planning to file a lawsuit against China for violating the Super 301 provisions of the U.S. trade law for its intervention of the foreign currency market.

If the lawsuit, the first dispute to be over a currency issue on the Super 301 provisions, is filed, the United States Trade Representative has the obligation to investigate the case. If unfair acts are found, the U.S. administration will file a formal lawsuit through the WTO.

Rae-Jeong Park ecopark@donga.com