China's Currency Devaluation and WTO Issues


In response to strident and frequent domestic political outcries, some of China's trade partners have recently accused the Chinese government of intervening in its currency markets, and are threatening to lodge complaints with the World Trade Organization. However, can the WTO assert jurisdiction over China's RMB issue? Analysis of the relevant WTO rules applicable to exchange rate policies does not provide a clear-cut or easy answer. A case like this would likely require expansive interpretation of vague WTO provisions, and also a broadening of its authority into peripheral trade-related areas. Moreover, it is doubtful that China's trading partners could actually make a convincing case that China has violated its commitments under the General Agreement on Tariffs and Trade (GATT) and the Agreement on Subsidy and Countervailing Measures (SCM Agreement).