Book Launch: Currency Conflict and Trade Policy: A New Strategy for the United States

C. Fred Bergsten and Joseph E. Gagnon presented their new book, Currency Conflict and Trade Policy: A New Strategy for the United States, published by PIIE, at a launch event on June 6, 2017. Congressman Bill Foster (D-IL) provided a congressional perspective on the book’s arguments regarding the linkages between US currency and trade policy in political practice. The event was introduced and moderated by former PIIE visiting fellow and current board member, Robert Zoellick, who is a former president of the World Bank, a former US Trade Representative, and the new chairman of the board of directors of AllianceBernstein.

Currency issues played a key role in the heightened concerns over trade agreements and trade deficits that were of unprecedented salience in recent congressional debates and in the 2016 US presidential election.  These concerns remain front and center as the Trump administration initiates its approach to linking international trade and exchange rates, declaring its intentions to include currency issues in the renegotiation of the North American Free Trade Agreement (NAFTA) and in any other trade agreements it may pursue.

Bergsten and Gagnon analyze the economics and politics of currency conflict, both globally and with a focus on the United States today. They present new statistical analysis of the connection between currency intervention and trade imbalances, and measure the impact of intervention on the US and other economies. They develop objective criteria for determining when currency intervention is excessive, elements of which already have been adopted by the US Treasury Department in its semiannual foreign exchange report. Finally, and provocatively, they propose a new policy of countervailing currency intervention for the United States which would commit the Treasury to offsetting the effects of currency manipulation by any G-20 country through equal purchases of that country’s currency.

C. Fred Bergsten was the founding director of the Institute and is currently senior fellow and director emeritus. Joseph E. Gagnon has been a senior fellow at the Institute since 2009, when he left the Federal Reserve Board after serving as associate director of both the divisions of International Finance and of Monetary Affairs. Both are world-recognized authorities on foreign exchange policy and its economic impact.