Pacific trade partners promise not to cheat on currencies

Thu Nov 5, 2015 3:33am EST
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WASHINGTON Nov 5 (Reuters) - Pacific trade partners have pledged not to deliberately weaken their currencies to win an export edge as part of a new free trade pact, the U.S. Treasury said on Wednesday.

All 12 members of the Trans-Pacific Partnership (TPP) promised to publicly report data on currency intervention and foreign reserve holdings, as part of a declaration accompanying the deal.

The new rules fall short of the trade sanctions that U.S. unions, car makers such as Ford Motor Co and some lawmakers demanded for countries which devalue their currencies in an effort to make their exports cheaper.

A senior U.S. Treasury official said, however, that countries would have to defend their policies in front of a group of peers, with meetings of TPP officials on currency and economic policy scheduled at least once a year.

"It will put a great deal of pressure on them with regard to the policies they are undertaking," he told reporters, in comments approved for release on Thursday.

"If a country within TPP, let's say in Southeast Asia, is taking steps to devalue their currency, while that's a problem for us, it's probably even a larger problem for the other countries in TPP that are in their region."

The pledge echoes a non-binding commitment by Group of Twenty (G20) members, including the larger TPP partners, not to engage in competitive devaluations.

Most TPP countries already report reserve holdings to the International Monetary Fund, but the Treasury official said Malaysia and Singapore would provide data on currency intervention for the first time.

The rules will come into effect at the same time as the wider trade deal and also apply to new members, which might include Indonesia and eventually China. (Reporting by Krista Hughes; Editing by Bill Rigby)