Editorial

US trade policy and partners

Written by The Frontier Post

The US Department of the Treasury has submitted its semiannual Report to Congress on Macroeconomic and Foreign Exchange Policies of Major Trading Partners of the United States across the globe. The report encompasses the Treasury assessment of the policies of major US trading partners, comprising more than 80 percent of US foreign trade in goods and services, during the four quarters through June 2021. The report stated that no major US trading partner manipulates the rate of exchange between its currency and the US dollar for purposes of preventing effective balance of payments adjustment or gaining unfair competitive advantage in international trade. According to the report, the Treasury made an enhanced analysis of several partners’ economies including Vietnam, Taiwan and Switzerland and studied their macroeconomic and currency related practices. The report suggests that the two nations except Taiwan full-fill all three of the US criteria under the Trade Facilitation and Trade Enforcement Act of 2015 during the period under review. According to a report, the Treasury found that twelve economies warrant placement on Treasury’s “Monitoring List” of major trading partners that merit close attention to their currency practices, these countries include China, Japan, Korea, Germany, Ireland, Italy, India, Malaysia, Singapore, Thailand, Mexico, and Switzerland. The report also stressed that China’s failure to publish foreign exchange intervention data and broader lack of transparency around key features of its exchange rate mechanism make it an outlier among major economies, while the Treasury intends to closely monitor the foreign exchange activities of Chinese state-owned banks.

The United States is the largest economy of the world and most of the nations had been desirous of doing trade with the US due to its liberal trade regime and principled approach during the past. However, the administration of former President Donald Trump has introduced protectionism and trade rivalries with other nations and no country has exceptions from it, ranging from Mexico and Canada to traditional rivals like Russia and China, all have great concerns regarding American self-centered approach. According to experts, US Trade Policy is broadly governed by the framework of World Trade Organization (WTO), however it has reciprocal free trade agreements with 14 nations, 5 preferential trade programs, trade and investment frameworks with 51 nations, 48 bilateral trade treaties with different nations as well as it has implemented tariffs and tariff quotas, measures to control its exports and imports on various grounds including selective export of dual use equipment and technologies and policy on anti-dumping duties etc. Besides these protectionist measures and tools, the US Department of Treasury regularly analyses the economies of its trading partners to examine how much money they have made out of trading with the United States and Treasury sorts to corrosive measures when it finds the US at a losing end. In fact, gain or loss in bilateral trade is a common phenomenon which changes with the passage of time and situation; however it never happens that a nation remains a high achiever at all time while constructive competition is the best approach to change the game in your favor. The introduction of extreme unfriendly measures taken by the US administration is continuously sensitizing its trading partners to search alternative markets, which will ultimately affect the US economy and the gap will be filled by the US’s competitors.

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The Frontier Post

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