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.