June 4, 2019 / 3:04 PM / 2 months ago

U.S. will not impose duties over foreign central bank policy: official

WASHINGTON (Reuters) - The Trump administration does not intend to make central bank monetary policy actions subject to countervailing duties as part of a new Commerce Department rule targeting undervalued currencies as unfair subsidies, a senior U.S. Treasury official said on Tuesday.

The official, speaking to reporters ahead of a meeting of G20 finance leaders this weekend in Fukuoka, Japan, said the new rule would be consistent with U.S. laws that the Treasury uses to evaluate whether trading partners manipulate their currencies for an export advantage.

Commerce is collecting public comments for the rule, which would include currency undervaluation as part of its product-specific anti-subsidy investigations .

Currency issues are routinely discussed by G20 finance leaders, who have long pledged not to target their exchange rates for competitive devaluations.

“In the draft rule, there is a reference that we do not intend to look at monetary and credit policies of central banks or monetary authorities as we look at government action that could impact the exchange rate,” the official said. “We’re not looking to make such an action subject to countervailing duties,” the official said.

Brazil and other countries had raised concerns about U.S. Federal Reserve actions, including its purchases of Treasury debt, during the global financial crisis as a potential competitive devaluation of the U.S. dollar.

The official said Commerce would need to apply some judgment in measuring currency undervaluation.

“It’s certainly more an art than a science, and we will be working on a framework to try to make that (analysis) as robust as possible,” the official said. “But there is judgment that is going to be needed.”

U.S. Treasury Secretary Steven Mnuchin will see the Chinese delegation at the G20 meeting in Fukuoka, but could not confirm whether he would meet Chinese officials in a bilateral meeting. The official also declined comment on prospects for a meeting between U.S. President Donald Trump and Chinese President Xi Jinping later in June at the G20 leaders summit in Osaka, Japan.

Reporting by David Lawder and Andrea Shalal; Editing by David Gregorio

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