United States Adds South Korea to Monitoring List of Major Trading Partners

Introduction

The United States Treasury Department has added South Korea to its monitoring list of major trading partners whose currency practices require closer attention. This decision was made in a semi-annual report that examines countries with large trade surpluses with respect to the United States and their intervention in foreign exchange markets.

The Monitoring List

The report identifies countries that meet certain criteria, including having a significant bilateral trade surplus with the United States and a material current account surplus. Of the countries on the monitoring list, Japan, South Korea, Taiwan, Vietnam, and Germany met two of these three criteria.

South Korea’s Inclusion

South Korea was added to the monitoring list due to its significant trade surplus with the United States and its material current account surplus. The report noted that South Korea’s intervention in foreign exchange markets was not deemed to be manipulative, but rather aimed at stabilizing its currency and maintaining a competitive advantage.

Other Countries on the Monitoring List

Besides South Korea, other countries on the monitoring list include China, Japan, Taiwan, Singapore, Vietnam, and Germany. Singapore was noted for its persistent one-sided foreign exchange intervention, while China was criticized for its lack of transparency in its exchange rate mechanism.

China’s Inclusion

China’s inclusion on the monitoring list was due to its failure to publish foreign exchange intervention and its broader lack of transparency around key features of its exchange rate mechanism. The Treasury Department also noted that China’s trade imbalance with the United States is significant and requires attention.

Conclusion

The United States Treasury Department’s monitoring list is intended to identify countries that may be manipulating their currencies to gain a competitive advantage in global trade. While no country was found to have manipulated its exchange rate to prevent effective balance of payments adjustments, several countries were identified as requiring closer attention due to their significant trade surpluses and intervention in foreign exchange markets.

FAQs

Q: What is the purpose of the monitoring list?
A: The monitoring list is intended to identify countries that may be manipulating their currencies to gain a competitive advantage in global trade.

Q: Which countries are on the monitoring list?
A: The countries on the monitoring list include South Korea, China, Japan, Taiwan, Singapore, Vietnam, and Germany.

Q: Why was South Korea added to the monitoring list?
A: South Korea was added to the monitoring list due to its significant trade surplus with the United States and its material current account surplus.

Q: Why is China on the monitoring list?
A: China is on the monitoring list due to its failure to publish foreign exchange intervention and its broader lack of transparency around key features of its exchange rate mechanism.

Q: What is the significance of the trade imbalance between the United States and China?
A: The significant trade imbalance between the United States and China is a concern for the United States Treasury Department, as it can have negative effects on the US economy.