Tackling Currency Manipulation with International Law: Why and How Currency Manipulation should be Adjudicated?
ABSTRACT: The protracted international dispute on currency manipulation has exposed the weakness of the contemporary international economic law framework in regulating the sovereign intervention on foreign exchange rate. The legal mandate of the WTO on currency manipulation remains questionable and the IMF fails to display authority over the currency regime of its members. Because a state’s control on the value of its currency has long been considered as a sovereign right, regulating a state’s currency regime is a daunting legal challenge. While arguing that the widespread notion of treating currency manipulation as a countervailable subsidy is wrong, this paper demonstrates that a suspected currency manipulation can be and should be adjudicated under the collaborative mandates of the IMF and the WTO. The IMF has the mandate to determine whether a state’s currency intervention constitutes an illegal currency manipulation and the WTO has the mandate to adjudicate on the legality of a state’s currency exchange regime based on the IMF’s finding of manipulation. The bridge between the two agreements is Article XV(4) of the GATT, which prohibits frustrating the intent of the IMF Agreement with a trade action.