UN trade official Supachai says yuan issue requires global readjustment
Forbes
UN trade official Supachai says yuan issue requires global readjustment
6 September 2006
SHANGHAI (XFN-ASIA) - Imbalances related to China’s foreign exchange policies cannot be addressed by China alone and require an international effort, Supachai Panitchpakdi, head of the United Nations Conference on Trade and Development (UNCTAD) said.
Supachai, a former secretary general of the World Trade Organization (WTO), also reiterated comments by his successor Pascal Lamy that bilateral free trade agreements (FTAs) and regional trade agreements (RTAs) were undermining the WTO development round.
Speaking to reporters, Supachai said that the currency issue should be dealt with in relation to other global imbalances and could not be solved by unilateral action from China.
’It’s not a single economy or only one or two economies in the world that can make this adjustment. Adjustment must be across the board in a global management of the exchange rate system in a way that the adjustments have to be taken at the same time.’
He added that this should be ’mainly by the advanced countries which have more of a margin for adjustment ... not by the countries that are poorer and have a much smaller margin for adjustment.’ He did not mention any specific scheme under which an adjustment could take place.
The yen was revalued by a multilateral action in 1985 with the Plaza Accord, in which France, Japan, the UK, US and West Germany agreed to intervene jointly to strengthen the yen and deutschmark against the dollar.
Supachai also said future adjustments to China’s currency should be gradual.
’We tend to believe that this kind of adjustment cannot be taken in a dramatic manner. It has to be gradual and certain flexibility in how this matter can be handled has to be given to the government.
’It cannot be a drastic move as a strong shift can bring about a kind of impact that we may not wish to see.’ UNCTAD at present recommends a middle ground between a fixed regime and a floating regime, he said.
The former WTO head also noted that regional FTAs were creating ’a messy patchwork’ of deals that were confusing for business and that the pursuit of bilateral deals was distracting governments from the Doha development round of WTO talks.
’If they want to do this (FTAs) they should do this in a way that does not interfere with the MFN (most-favored nation) effort at the WTO,’ he said, adding that regional businesses prefered the WTO’s (MFN) mechanisms ’to the legal complexities of regional and bilateral deals.’
’At so many (WTO) meetings I saw that people were so preoccupied with the treatments of RTAs and FTAs that they did not have enough time to concentrate on the DDA (Doha Development Agenda).’
Supachai was in Shanghai for a domestic press conference relating to UNCTAD’s 2006 report, which had been issued at the end of August.
