US Maintains South Korea as 'Currency Watchlist Country'... Includes 12 Countries Such as China and Japan

U.S. Trade Surplus Meets Current Account Surplus Criteria

[Image source=Yonhap News]

[Asia Economy Sejong=Reporter Kwon Haeyoung] The U.S. government has maintained South Korea's status as a currency monitoring country. China, Japan, and Germany were also designated again as monitoring countries.

According to the Ministry of Economy and Finance on the 11th, the U.S. Treasury Department announced this in its "Macroeconomic and Foreign Exchange Policies of Major Trading Partners" report released on the 10th (local time). The report contains evaluations of the macroeconomic and foreign exchange policies of the top 20 countries with which the U.S. has large trade volumes (goods and services) from January to December 2021.

Twelve countries, including South Korea, China, Japan, and Germany, were classified as monitoring countries. The U.S. evaluates the top 20 trading partners based on three criteria under the Trade Facilitation and Trade Enforcement Act: bilateral trade surplus with the U.S., current account surplus, and net purchases of dollars. If a country meets all three criteria, it is subject to in-depth analysis; if it meets one or two criteria, it is classified as a monitoring country. Specifically, the criteria are ▲a bilateral trade surplus with the U.S. of $15 billion or more ▲a current account surplus of 3% or more of GDP or a current account gap of 1% or more ▲foreign exchange market intervention through net purchases of dollars amounting to 2% or more of GDP.

South Korea met the criteria for bilateral trade surplus and current account surplus, thus being classified as a monitoring country. Last year, South Korea's bilateral trade surplus with the U.S. was $22 billion, and its current account surplus was 4.9% of GDP, meeting two criteria. However, it was evaluated as having no foreign exchange market intervention since it was a net seller of dollars.

An official from the Ministry of Economy and Finance explained, "As in the previous report, the U.S. used the net transaction data disclosed by our foreign exchange authorities instead of the U.S. estimates when judging the foreign exchange market intervention criterion."

Vietnam and Taiwan, which met all three criteria and were classified as in-depth analysis countries in the previous report, were downgraded to monitoring countries this time. Ireland was excluded from the monitoring list after meeting only one criterion for two consecutive years. Switzerland was the only country classified as an in-depth analysis country.

No country was classified as a currency manipulator in this report.

An official from the Ministry of Economy and Finance stated, "The U.S. encouraged strong, fair, and environmentally friendly medium-term growth," adding, "It recommended pursuing structural reforms such as enhancing social safety nets, resolving labor market polarization, and promoting youth job creation and poverty reduction among the elderly to raise potential growth rates."

This content was produced with the assistance of AI translation services.