In his biannual report to Congress on the behavior of America’s trading partners, the U.S. Secretary of the Treasury said China was no longer a “currency manipulator.” The report downgraded the country to the “monitoring list” of 10 economies kept under watch to ensure their trade policies are not unfair and detrimental to U.S. interests.

Germany, Italy and Ireland are the three European countries on this list of potential currency manipulators.

Save for the detail that they don’t have their own currencies.

The three countries have been members of the eurozone since the creation of the common currency 20 years ago. And they don’t have a central bank that could “intervene in the foreign-exchange market” — one of the three criteria on which the U.S. would base a decision to declare them currency manipulators.

But hold the laughter: Washington has a point. Looking at the arguments made in the U.S. government report, it is clear that on Germany and Italy the document could have been written by European Commission or European Central Bank officials. Indeed, the same points have been made over and over again in recent years, to urge Berlin and Rome to reform their troublesome economic models.

Of course, the U.S. looks at it from the standpoint of its own national interests: Germany has a sizable trade surplus with the U.S. — $67 billion in the year ending in June, 2019. But U.S. President Donald Trump’s administration is right to point out that the country’s massive current account surplus, $283 billion over the same period, results from “lackluster demand growth” and the advantages offered by the euro, which cannot strengthen as much as it would if it was just Germany’s currency. The report calls this Germany’s “undervalued real effective exchange rate.”

As for Italy, the U.S. Treasury report is also right to point out that the country’s sizable surplus results from the country’s persistent lack of growth and inability to decide or implement the reforms that would tackle the economy’s long-term problems.

None of this would shock the EU and ECB officials who have repeatedly called on Germany to reform its export-oriented economy and loosen its fiscal policy, and on Italy to get serious about structural reforms.

But the Treasury report also helps to highlight Europe’s problem with the rest of the world. The eurozone’s massive current account surplus creates a damaging imbalance for the global economy. It is now larger than China’s, and will amount to €390 billion this year, according to the EU’s forecast. That would amount to 3.2% of GDP; the U.S. administration starts worrying about its trade partners when that number is above 2%. It has shrunk from the post-crisis high of 3.8% of GDP, but remains high enough to make the rest of the world feel that Europe is exporting its economic problems through its current account.

Trump has often tweeted his frustration about the ECB when it lowered rates, hinting that it was weakening the euro on purpose. But the U.S. Treasury knows better, and pointedly notes that the ECB “has not intervened on foreign currency markets since 2001.” In any case the level of the euro is not a central bank policy target — and could hardly be, considering the economic differences between the 19 member states.

But Washington cannot be faulted for its policy prescriptions for Germany and Italy. They seem to have been copied-and-pasted from the most recent ECB releases and EU reports.

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