The House-Senate Joint Economic Committee yesterday called on Taiwan to find ways of cutting its trade surplus in an effort to help end world trade imbalances.
The joint panel said Taiwan's leaders should consider increasing domestic investment and consumption, revaluing the currency upward, and further opening home markets to foreign goods.
Committee Chairman Paul Sarbanes (D-Md.) said the report was the first in the series of committee studies on world trade imbalances.
"The current situation, with huge deficits in some countries and huge surpluses in others, cannot be sustained," he said. "The longer it continues, the greater the danger the markets will impose a correction in the form of a wrenching world recession."
He said that solutions to world trade imbalances usually focus on nations with deficits, but that those with surpluses, such as Taiwan, also have a role to play.
Sarbanes noted that Taiwan has only 19 million people, but is the fourth-largest exporter to the United States and has a current account surplus of more than 20 percent of gross national product -- four times those of Japan and West Germany.
As a result, Sarbanes said, Taiwan's central bank had $65 billion in reserves, enough to cover three years of imports.