Mattoo, AadityaSubramanian, Arvind2012-06-012012-06-012008-07https://hdl.handle.net/10986/6846Two aspects of global imbalances - undervalued exchange rates and sovereign wealth funds - require a multilateral response. For reasons of inadequate leverage and eroding legitimacy, the International Monetary Fund has not been effective in dealing with undervalued exchange rates. This paper proposes new rules in the World Trade Organization to discipline cases of significant undervaluation that are clearly attributable to government action. The rationale for WTO involvement is that there are large trade consequences of undervalued exchange rates, which act as both import tariffs and export subsidies, and that the WTO's enforcement mechanism is credible and effective. The World Trade Organization would not be involved in exchange rate management, and would not displace the International Monetary Fund. Rather, the authors suggest ways to harness the comparative advantage of the two institutions, with the International Monetary Fund providing the essential technical expertise in the World Trade Organization's enforcement process. There is a bargain to be struck between countries with sovereign wealth funds, which want secure and liberal access for their capital, and capital-importing countries, which have concerns about the objectives and operations of sovereign wealth funds. The World Trade Organization is the natural place to strike this bargain. Its General Agreement on Trade in Services, already covers investments by sovereign wealth funds, and other agreements offer a precedent for designing disciplines for these funds. Placing exchange rates and sovereign wealth funds on the trade negotiating agenda may help revive the Doha Round by rekindling the interest of a wide variety of groups.CC BY 3.0 IGOAGREEMENT ON SUBSIDIESAGRICULTUREARBITRATIONASSET MANAGERSASSET PRICESBALANCE OF PAYMENTSCAPITAL FLOWSCAPITAL IMPORTERSCAPITAL INFLOWSCAPITAL STOCKCENTRAL BANKCENTRAL BANKSCODE OF CONDUCTCOLLATERALCOMMODITYCOMMODITY PRICESCOMPARATIVE ADVANTAGECOMPETITIVE ADVANTAGECOMPETITIVENESSCONSUMER GOODSCONTRACTING PARTIESCORPORATE GOVERNANCECOUNTERVAILING ACTIONCOUNTERVAILING MEASURESCREDIBILITYCREDITORCREDITORSCROSS-BORDER FLOWSCURRENCYCURRENCY APPRECIATIONCURRENT ACCOUNT SURPLUSCURRENT ACCOUNT SURPLUSESDEBTDEBTORDEBTOR COUNTRIESDEVELOPING COUNTRIESDEVELOPING WORLDDISCLOSURE REQUIREMENTSDISPUTE SETTLEMENTDISPUTE SETTLEMENT MECHANISMDISPUTE SETTLEMENT PANELDISPUTE SETTLEMENT SYSTEMDOMESTIC DEBTDOMESTIC SUPPORTECONOMIC COOPERATIONECONOMIC DEVELOPMENTECONOMIC INTEGRATIONECONOMIC POWERSECONOMIC RESEARCHEMERGING MARKETEMERGING MARKET ECONOMIESEMERGING MARKETSEMERGING-MARKETENFORCEMENT MECHANISMENFORCEMENT PROCESSENVIRONMENTAL STANDARDSEUROPEAN UNIONEXCHANGE RATEEXCHANGE RATE REGIMESEXCHANGE RATESEXPORT GROWTHEXPORT SUBSIDIESEXPORT SUBSIDYEXPORTERSEXPORTING COUNTRIESEXPORTSEXTERNAL TRADEFINANCIAL ARRANGEMENTSFINANCIAL CONTRIBUTIONFINANCIAL CRISISFINANCIAL SERVICESFISCAL POLICYFIXED EXCHANGE RATEFLEXIBLE EXCHANGE RATEFLEXIBLE EXCHANGE RATE REGIMESFLOW OF CAPITALFOREIGN ASSETSFOREIGN CAPITALFOREIGN CURRENCYFOREIGN DIRECT INVESTMENTFOREIGN DIRECT INVESTMENTSFOREIGN EXCHANGEFOREIGN EXCHANGE MARKETSFOREIGN EXCHANGE RESERVESFOREIGN GOVERNMENTFOREIGN GOVERNMENTSFOREIGN INVESTMENTFOREIGN INVESTMENTSFOREIGN OWNERSHIPFOREIGN SALES CORPORATIONFORWARD MARKETFREE TRADEFREE TRADE AGREEMENTFREE TRADE AGREEMENTSFULL EMPLOYMENTGDPGENERAL AGREEMENT ON TRADE IN SERVICESGEOGRAPHICAL INDICATIONSGLOBALIZATIONGOVERNMENT ACTIONGOVERNMENT BONDSGOVERNMENT OWNERSHIPHOLDINGHOLDINGSIMPORT RESTRICTIONSIMPORTING COUNTRIESINCOMEINCOME LEVELINCOMESINDUSTRIAL COUNTRIESINDUSTRIALIZATIONINSTRUMENTINSURANCEINSURANCE COMPANIESINTELLECTUAL PROPERTYINTERNAL MARKETINTERNATIONAL BANKINTERNATIONAL CAPITALINTERNATIONAL COOPERATIONINTERNATIONAL ECONOMICSINTERNATIONAL TRADEINVESTMENT FUNDSINVESTMENT OPPORTUNITIESINVESTMENT STRATEGYJURISDICTIONLEGAL MECHANISMLENDERLENDER OF LAST RESORTLEVEL OF CONFIDENCELIBERALIZATIONLIBERALIZATION OF TRADEMARKET ACCESSMARKET CAPITALIZATIONMARKET COUNTRIESMARKET ECONOMYMARKET SHAREMARKET SIZEMERCANTILISMMONETARY FUNDMONETARY POLICIESMONETARY POLICYMULTILATERAL ACTIONMULTILATERAL APPROACHMULTILATERAL RULESMULTILATERAL TRADENATIONAL INVESTMENTNATIONAL SECURITYOIL PRICEOIL PRICESPENSIONPENSION FUNDPENSION FUNDSPER CAPITA INCOMEPOLICY RESEARCHPOLITICAL REASONSPOLITICAL RISKSPOOLS OF CAPITALPORTFOLIOPORTFOLIO INVESTMENTSPRIVATE CAPITALPRIVATE CAPITAL FLOWSPRIVATE EQUITYPUBLIC POLICYQUANTITATIVE RESTRICTIONSREAL EXCHANGE RATEREAL EXCHANGE RATESREGULATORSREINSURANCEREMEDIESREPUTATIONRESERVERESERVE BANKRESERVESRETURNRETURNSSAFEGUARD ACTIONSECURITY CONCERNSSETTLEMENTSETTLEMENT SYSTEMSMALL COUNTRIESSTOCKSSURVEILLANCE FUNCTIONSYSTEM OF PREFERENCESTAKEOVERTAXTAXATIONTELECOMMUNICATIONSTRADE BARRIERSTRADE COMMISSIONERTRADE DISPUTESTRADE LIBERALIZATIONTRADE MINISTRIESTRADE NEGOTIATIONSTRADE NEGOTIATORSTRADE POLICIESTRADE POLICYTRADE RESTRICTIONSTRADINGTRADING SYSTEMTRANSPARENCYTREASURYTREATIESTREATYUNDERVALUATIONUNILATERAL ACTIONSURUGUAY ROUNDWEALTHWORLD ECONOMYWORLD INVESTMENT REPORTWORLD MARKETWORLD TRADEWORLD TRADE ORGANIZATIONWTOWorld Bank10.1596/1813-9450-4668