Currency and Subsidies
September 14, 2020
William Alan Reinsch
Fair warning: today’s column is for trade wonks. If you’re looking for trenchant commentary on trade in the election or the two candidates’ trade policies, you can stop reading right here. I’ve attempted that before and will do so again, but today is for us wonks. The topic is currency manipulation as a subsidy. It is timely because the Commerce Department recently launched its first investigation into that possibility―against imports of Vietnamese tires―and the Treasury Department has provided Commerce with its verdict: that Vietnam is indeed manipulating its currency. This has important implications.
First, we begin with a short history. U.S. law on subsidies is not new. It dates back to the 1890s, and basic principles are embedded in World Trade Organization (WTO) rules; namely, that it is acceptable to impose a duty on subsidized imports (called a countervailing duty, or CVD) if they are determined to have injured a U.S. party. The amount of the duty is to be no more than the amount of the subsidy, so it is intended to offset the “crime” but not to be punitive. In the United States, the Commerce Department determines whether a subsidy exists, and the International Trade Commission decides whether injury has occurred.
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한국
중국
미국
지원/혜택
