China blamed quantitative easing for damaging emerging economies and rejected Brazil's proposal of using world trade rules to compensate for currency misalignments, during a debate at the WTO on Monday. "We, together with many other countries, have been critics of this irresponsible and beggar-thy-neighbour policy," China's deputy permanent representative to the World Trade Organisation, Zhu Hong, said, referring to the monetary stimulus policy often shortened to QE.
"It has a lingering negative impact on developing, emerging economies in particular," Zhu said during a debate on currency fluctuations at the WTO in Geneva, according to a transcript provided by a Chinese official. The meeting was called to discuss Brazil's proposal that WTO rules should include a system for dealing with currency misalignments.
Brazil's Ambassador Roberto Azevedo, who some trade diplomats say is a contender to replace WTO chief Pascal Lamy when he steps down next year, has gradually hardened up his demands on the issue.
After getting WTO members to agree to examine the available literature on the subject last year, Brazil circulated a proposal on November 5, explaining that WTO rules contained language about dealing with currency-related trade distortions but no adequate instruments to act directly. "The WTO seems to be systemically ill-equipped to cope with the challenges posed by the macro and microeconomic effects of exchange rates on trade," Brazil said in its proposal, a copy of which was obtained by Reuters.
"Members may wish, against this background, to consider the need for exchange-rate trade remedies and to start some analytical work to that effect." The proposal did not mention quantitative easing and explicitly called for analysis "from a systemic perspective" rather than from any one country's experience. But it was accompanied by a graph showing the estimated misalignment of Brazil's own currency, the real, with an over-valuation of nearly 40 percent in 2011.
Comments
Comments are closed.