Trade rules and exchange rate misalignments: in search for a WTO solution

Vol. 34 No. 3 (2014)

Jul-Sep / 2014
Published July 1, 2014
PDF-English
PDF-English

How to Cite

Thorstensen, Vera, Emerson Marçal, and Lucas Ferraz. 2014. “Trade Rules and Exchange Rate Misalignments: In Search for a WTO Solution”. Brazilian Journal of Political Economy 34 (3):370-95. https://doi.org/10.1590/0101-3157-2014-2396.

Trade rules and exchange rate misalignments: in search for a WTO solution

Vera Thorstensen
professors of the EESP-FGV and coordinators of the FGV Observatory on Exchange Rate.
Emerson Marçal
professors of the EESP-FGV and coordinators of the FGV Observatory on Exchange Rate.
Lucas Ferraz
professors of the EESP-FGV and coordinators of the FGV Observatory on Exchange Rate.
Brazilian Journal of Political Economy, Vol. 34 No. 3 (2014), Jul-Sep / 2014, Pages 370-395

Abstract

 The debate on the link between trade rules and rules on exchange rates is raising the attention of experts on international trade law and economics. The main purpose of this paper is to analyze the impacts of exchange rate misalignments on tariffs as applied by the WTO – World Trade Organization. It is divided into five sections: the first one explains the methodology used to determine exchange rate misalignments and also presents its results for Brazil, US and China; the second summarizes the methodology applied to calculate the impacts of exchange rate misalignments on the level of tariff protection through an exercise of “misalignment tariffication”; the third examines the effects of exchange rate variations on tariffs and their consequences for the multilateral trading system; the fourth one creates a methodology to estimate exchange rates against a currency of the World and a proposal to deal with persistent and significant misalignments related to trade rules. The conclusions are present in the last section.  

JEL Classification: F10; F13; F31.


Keywords: Exchange rate international trade tariffs IMF WTO