Exchange rate measures, who judges the violation? Sorting out prerogatives

Abstract

For the last couple of years the effects of exchange rate misalignments on international trade has been discussed at length by the academy and the debate has seen its way into the agenda of the World Trade Organization (WTO). Worried by the damages that devaluated exchange rates could cause to international trade flows, Brazil has, in April 2011, presented to the Working Group on Trade, Debt and Finance (WGTDF) of the WTO a proposal of an academic research on the relationship between exchange rates and international trade (WT/WGTDF/W/53). Discussions followed and, in September of the same year, the country proposed the examination of the available instruments and trade remedies in the multilateral system that might redress the impacts of exchange rate misalignments (WT/WGTDF/W/57). The WTO Secretariat, upon request of the WGTDF, elaborated a Note on a Review of Economic Literature, in September 2011. Finally, in November 2012, Brazil presented its third proposal, discussing the effects of exchange rate misalignments on trade instruments and examining the possibility of WTO rules to address such effects (WT/WGTDF/W/68). Discussions continue in the WGTDF.