New International Monetary Fund Policy Will Subject Japan to Tougher Scrutiny on Currency Misalignment

WASHINGTON--Stephen Collins, President of the Automotive Trade Policy Council, whose members include DaimlerChrysler Corporation, Ford Motor Company and General Motors Corporation, issued the following statement regarding the International Monetary Fund’s announcement that it is establishing a major new system of exchange rate surveillance of its Member countries:

“We are encouraged that the IMF has recognized the urgency and priority of taking action against countries that engage in reckless and dangerous foreign exchange practices, which can undermine the stability of the international financial system.

“Under the new program announced this week, the major factors the IMF will consider to determine that a country is inappropriately manipulating its currency include large scale currency interventions, the accumulation of reserves and ‘fundamental exchange rate misalignments.’

“It is clear that, under the criteria established in the new surveillance system, the Government of Japan will be identified by the IMF as a country that manipulates its exchange rate in seeking to gain an unfair trade advantage. The Japanese yen today is at a four-and-a-half year low against the U.S. dollar and at its lowest level since 1986 on a real effective basis. Meanwhile Japan’s GDP grew at 3.3% in the first quarter of 2007, outpacing both the US and the European Union, and its global trade surplus is up 50% this year over 2006, yet Japan maintains currency reserves of some $900 billion that hold down the value of the yen and boost exports, particularly autos. Two-thirds of the $88 billion US-Japan trade deficit last year was exclusively a result of automotive trade.

“To date, the U.S. Department of Treasury has refused to engage in dialogue with the Japanese Government over its weak yen policy that is hurting U.S. manufacturing. We hope that the IMF’s recognition of the urgency and priority of this issue, combined with new bills to address unfair currency manipulation and misalignment introduced recently in the Senate, will finally compel the U.S. government to work aggressively with the IMF and our other major trading partners to force Japan to end its ‘beggar thy neighbor’ policy of generating economic growth with huge increases in exports subsidized by the artificially weak yen.”

For additional information, go to www.autoyensubsidy.org.

The Automotive Trade Policy Council, Inc. (ATPC) is a Washington, D.C.- based non profit trade association that represents the common international economic, trade and investment interests of its member companies: DaimlerChrysler Corporation, Ford Motor Company and General Motors Corporation.