Disagreements about exchange-rate policies may threaten economic stability and commerce while putting the recovery from the worst recession in 60 years in “serious jeopardy,” the World Trade Organization’s chief said.
“I heard recently warnings that this stability could be put at considerable risk, and in what some perceive as a pursuit of an exchange-rate-induced comparative advantage,” Pascal Lamy told the WTO’s 153 members in Geneva today. “In other words, the hard-won path toward stability and trade-led recovery could be put in serious jeopardy by uncooperative currency behavior.”
Lamy, who in the past has refused to discuss exchange rates, didn’t name countries or currencies. U.S. lawmakers and European official have pressed China to raise the value of its currency, and the House of Representatives last month passed a measure that would allow American companies to seek import duties to counter the effect of a weak yuan.
“It is generally accepted that the answer to this issue does not lie in the WTO and that other institutions, in particular the IMF, are better placed and have more specific mandates to address it,” Lamy said. “I thought I would share this concern with you because I believe history will judge us harshly if our collective efforts toward exiting the crisis were to be frustrated by short-sighted individual rent-seeking.”
Finance ministers and central bankers from the Group of 20 are scheduled to discuss currencies in South Korea on Oct. 23-24 before the G-20 summit. French President Nicolas Sarkozy, who takes the chairmanship of the G-20 on Nov. 12, said in August that the group will discuss volatility in currency markets and called for a greater role for alternative currencies.