Rmb Exchange Rate And Countervailing Study Under The Framework Of WTO And IMF

As is known to us, the exchange rate is formed by international economicwidening and frequent exchanges, and the exchange rate system is the way todetermine the price relation of one country’s currency to another’s. Exchange ratearrangements have the exchange rate principle of sovereignty, which is thesovereignty of a country’s currency in compliance with the rules of internationallaw, and directly use the domestic law to determine the parity of the local currencyagainst the currency of another country. The RMB exchange rate has beenbecoming the core concern of China and Western countries since2002, the UnitedStates and other Western countries accuse that RMB exchange rate violate theobligations of international law, and exist subsidy export trade. They want tobring litigation on RMB exchange rate subsidy export trade through the WTOdispute regulation in order to forcing the rapid appreciation of the RMB.From international legal point of view, accusing on the RMB exchange rateare around two main lines: First, they claimed that the RMB exchange rate wasunderestimated to give China exports subsidy which had violated WTO rules andthe SCM Agreement; Second, they accused that china violated the IMF Agreementand manipulated RMB exchange rate which had caused external instability. In this paper, firstly, leading out the Western countries accuse the undervaluedRMB to subsidize exports theory through the backdrop of the long-term to foreigntrade surplus in China. Secondly, analyzing the relationship between exchangerates and trade by theory, and pointing out exchange rate is the nature of acountry’s sovereignty property. Base on these theoretical analysis, through theresults of two major international exchange rate estimating, analyze the problemsof the standard of estimate the RMB exchange rate. Subsequently, in the case ofthat even if the RMB exchange rate was underestimated, which can not be appliedto the countervailing provisions of the WTO agreement. Finally, by the way ofanalyzing the theory manipulation of the RMB exchange rate and fundamentalimbalance, we can make a decision that under the framework of the existing IMFthe RMB exchange rate is legitimate. To sum up the discussion of the existing rules,we believe that the RMB exchange rate is in line with the IMF and the WTOframework system.