None of them, however, met all three of the criteria, which include: maintaining a significant trade surplus with the United States, maintaining a current account surplus larger than 3.0 percent of the country’s GDP, and repeated intervention in the foreign exchange market to keep its currency from appreciating.
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The new assessment expands on the previous biannual “currency manipulator” review mandated by Congress that threatened to punish any country found guilty of artificially holding its currency down to boost its exports.
The United States has put Germany, China and three other East Asian economies on a new “monitoring” list of trade partners with excessive current account and trade surpluses.
It is the first time for the US government to implement the new provisions of the Trade Facilitation and Trade Enforcement Act of 2015, which provides new tools for the Treasury to judge “unfair currency practices” of its major trading partners.
Treasury said it will closely watch and assess the currency practices of five countries – China, Japan, Korea, Taiwan and Germany – over the next six months after the countries met two of three new criteria required under a new customs law, according to a new report sent to Congress.
Korea’s goods exports to the USA stood at $2.83 billion in 2015, while its current account surplus posted 7.7 percent of the GDP.
Under criteria Congress established earlier this year, Treasury put the countries on a monitoring list that will trigger talks but no economic penalties.
If a country meets all three criteria, it could eventually be cut off from some United States development financing and excluded from U.S. government contracts.
In the report, the Treasury said that Taiwan has a material current account surplus and engaged in continued net foreign currency purchases during most of 2015.
Elsewhere in the report, the United States rebuffed recent Japanese efforts to seek informal consent to act against an unwelcome yen rise, saying that the current dollar-yen market was “orderly” and reiterating all countries must abide by G20 and G7 commitments on exchange rate policies.
The Treasury added that Korea did not conduct a “one-sided intervention” to weaken its currency, but sold an estimated $26 billion in foreign exchange to “resist” the rapid depreciation of the won from the second half of 2015 until the first quarter of this year.
The report also urged South Korea to limit its foreign exchange intervention “only to circumstances of disorderly market conditions and to increase the transparency of its foreign exchange operations”.
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In his economic plan, Trump has promised to immediately declare China a currency manipulator as a way to bring the country to the bargaining table to change trade practices US critics contend are hurting American workers and companies.
