U.S. Envoy: Weak Dollar Reduces Protectionism

MoneyNews
Thursday, May 8, 2008

BRUSSELS -- The dollar's weakness is helping to reduce protectionism in the United States and eases the impact of higher oil prices in Europe, a top U.S. envoy said on Thursday.

The U.S. special envoy for European Affairs, C. Boyden Gray, was responding to a question about a Financial Times report that EU Trade Commissioner Peter Mandelson was concerned about protectionist talk from U.S. presidential candidates.

"The dollar reduces protectionist pressure in the U.S. by helping to reduce our current account deficit and increasing exports," Boyden Gray told reporters.

"The dollar has come back in recent days, weeks," he said.

The FT also reported on Thursday that officials in the United States and Europe were now united in their desire to see the dollar strengthen against the euro, citing officials on both sides of the Atlantic.

But Boyden Gray said Europe benefited from the strong euro.

"For Europe, the increase in the price of oil is no way near as damaging as it is for us. You can look at it all in different ways but it balances out in the end," he added.

The U.S. currency's recent weakness against the euro has helped shield European companies from rises in oil prices as crude is priced mainly in dollars.

European Union and U.S. officials are likely to discuss the dollar and its impact on trade between the two sides informally when they meet next Tuesday in Brussels for the Transatlantic Economic Council.

The euro hit a two-month low against the dollar on Thursday, hurt by the FT report that U.S. and European officials want the dollar to strengthen from its recent record lows against the 15-nation single currency.

"There is so much EU investment in the U.S. that it's hard to know which way it cuts," Boyden Gray said.

With so much U.S. investment in the EU as well, "it's almost a hedge against each other," he said.

"This integration means there is a hedging, or balancing on both sides."

He cautioned against putting too much store in what presidential candidates said on the stump.

"There is an old statement in America that in the primaries candidates run to the extremes and then in the election they run in the middle," Boyden Gray said.

"I would not take it as a promise of what exactly is going to happen," he added.

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In short - beggers can't be chosey