U.S. to police trade reforms upheld by IMF
U.S. to police trade reforms upheld by IMF
WASHINGTON (Dow Jones): The Clinton administration has established a system to police implementation of trade reforms in Asia backed by the International Monetary Fund, Trade Representative Charlene Barshefsky says.
Barshefsky's agency, along with the Commerce Department, are jointly monitoring the status of structural and systemic trade reforms that the IMF is promoting in Asia -- particularly in Indonesia and South Korea, she said.
She briefed a private-sector advisory body on Thursday about the monitoring operation, which Barshefsky explained is designed to make sure that IMF programs aren't being used to create export incentives for Asian nations rather than more open markets as embodied in recent IMF agreements.
"We have to be very careful that there is monitoring of countries compliance with those IMF commitments," Barshefsky said.
Indonesia and South Korea are of particular interest right now because the IMF has secured structural reform commitments from their governments aimed at opening their markets, Barshefsky said.
And while the U.S. is sensitive to the economic recovery needs of the Asian nations, she underscored concerns that the IMF stabilization efforts could serve as an opportunity for authorities to institute trade-distorting policies under the guise of economic recovery steps.
She said that IMF-linked trade reforms in Asia could well bear fruit since "over time we observed very little backsliding on the part of countries as a general matter" when they have IMF programs in place.
"One, because the IMF will stop disbursing funds," Barshefsky added. "We have seen an example of this already" in Indonesia. "And No. 2, even after IMF disbursements are finished there is very little backsliding because countries are fearful of disrupting their relationships with the IMF," Barshefsky insisted.
Barshefsky explained to reporters Thursday that her agency and Commerce intend to transmit to the IMF through the Treasury Department any concerns that exist over trade policies in IMF member countries. And the State Department has also asked its embassies to enhance monitoring operations in the field, Barshefsky said.
"We have now institutionalized an inter-agency team working with the international financial institutions through Treasury," she said. "The area of biggest concern is to ensure that the IMF funds are not used to subsidize capacity and that's something we're looking at carefully."
The U.S. "will be very sensitive to ensure that the credits the financial institutions provide to recipient countries aren't being used to provide export incentives or subsidies, particularly those that are WTO inconsistent."
Barshefsky pointed to Indonesia's national car project as an example of where the IMF and the WTO are playing an important role in securing a more open regime.