The Treasury instead said it would continue its “enhanced engagement” with Vietnam and Switzerland and would begin such talks with Taiwan, including urging trading partners to evaluate their currencies. There is no definite period for how long such talks can go on without a resolution.
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Mark Sobel, president of the Forum of Official Monetary and Financial Institutions, said the Biden administration was wise in assessing how countries are managing foreign exchange.
He said Switzerland faces unusual monetary policy and safe haven challenges and Vietnam’s foreign exchange reserves were low when the manipulator label was received last year. A government can suppress the value of its currency by selling it in foreign exchange markets and stockpiling dollars.
In addition, Taiwan, Thailand and South Korea, according to Mr. Sobel, have traditionally been worse offenders than Switzerland and Vietnam, even though the US has avoided calling them out for it.
“I think the new Treasury team is more willing to recognize that the relative policy divergence between the US and others is an important factor,” Mr Sobel said. “I also think the Trump administration approach was too much belligerent as a general proposition.”
According to the United States Trade Representative Office, Taiwan is the 10th largest trading partner of the United States in 2019. Vietnam is the 13th largest, and Switzerland is the 16th.
As a warning to Taiwan, the United States is deepening ties with the island as part of its effort to confront with China. However, it has also come as the Biden administration is calling for a major investment in the domestic semiconductor industry to reduce America’s dependence on imports from Taiwan and other countries.