The US Treasury Department Issus Statement about TPP Currency Provisions

The US Treasury Department issued a statement on November 5 about the TPP currency provisions. Japanese newspaper Ukan Fuji reported that the announcement amounts to a veto of South Korea’s potential membership in the TPP. The announcement said that the 12 member states of the TPP agreed to end currency devaluations used to increase exports. The announcement said that in order to verify that the 12 countries are adhering to the agreement, they will hold annual meetings between IMF officials and senior government representatives of each member state. In addition, each member state must release its data on currency interventions and foreign exchange reserves. Japanese newspaper Ukan Fuji reported that this is a very high standard for South Korea to meet and therefore, it amounted to a veto of South Korea’s potential membership in the TPP.

TPP agreement finalized in October in Atlanta, Georgia, South Korea officially started considering joining the agreement. Ukan Fuji reported that after TPP was finalized, South Korea began to realize the agreement’s significance since its members account for about 40% of world GDP. As a result, South Korea began exploring participation in the TPP. The Treasury Department’s announcement said that TPP members would be required to release regular reports detailing currency manipulations. According to Ukan Fuji, the US Treasury Department has referred to South Korea in its official reports as one of the least transparent countries with respect to its own currency practices.  In an October meeting between US President Obama and South Korean President Park Guen-hye, Obama expressed his concerns about South Korea’s currency manipulation. Right before the meeting, the US demanded that South Korea include the wording  “South Korea should no longer manipulate its currency rate” into the joint statement pledging cooperation between both countries.

Money Today reported that South Korean government officials do not interpret the announcement as having legal force. They conclude that it would not be an obstacle for South Korea to participate in TPP.

The announcement also referred to China’s large purchases of its currency and pointed out that the US questions whether the Chinese yuan is even qualified to be an international currency.

(Source: Ukan Fuji on November 10, 2015)

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