[ G20 Summit Concludes in Seoul, Holds off on Specifics -NTDTV ]
The G-20 (Group of 20 nations) summit in Korea ended last weekend with major, albeit narrow, accords in principle among the world leaders regarding currency exchange and financial regulations.The G-20 nations reached a deal that major global economies would agree to common standards, in principle, that would help flag trouble spots in national economies, but stopped short of developing details around the framework.
The Seoul Action Plan, as it is called, will help shape common monetary and exchange rate policies, trade and development policies, fiscal policies, global financial reforms, and structural reforms.
A group of finance ministers—including the U.S.’s Ben Bernanke—as well as the International Monetary Fund will hash out the details over the next several months.
The agreement capped a sometimes-divided two-day affair in which little real progress was made regarding trade imbalance and currency valuation. The United States also left empty-handed over a much-anticipated trade agreement with host nation South Korea.
Calling the agreement a “work in progress,” according to a press statement issued by the White House, Obama left Korea saying that much remains to be done.
But other world leaders were quick to hail the agreement as a step in cooperation. “Cohesion and cooperation defined the G-20 during the crisis,” said Dominique Strauss-Kahn, International Monetary Fund director, in a statement. “Now the challenge is to secure the recovery and to create the growth and jobs that the world needs.”
No Backing of U.S. Currency Agenda
The common action plan is generally viewed as less potent on currency exchange and trade surplus as President Barack Obama had hoped going into the G-20 summit, which began last Thursday.
President Obama hoped that the summit would be a launch pad to promote more currency flexibility by the Chinese, whose cheap currency is widely believed to be contributing to the U.S.’s massive trade deficit with China due to the relative cheapness of Chinese products.
China, the president argues, artificially undervalues its currency, the yuan, to make Chinese exports appear cheaper relative to other nations, yielding a major competitive advantage in the global marketplace.
U.S. business lobbies—including lawmakers and the Steelworkers Union—have long argued that cheap Chinese currency has cost American jobs.
But global leaders, including Chinese President Hu Jintao and German Chancellor Angela Merkel, rebuffed a currency plan proposed by Korea and strongly backed by the United States, which would have set limits on a country’s currency reserves and cap trade surplus at 4 percent of GDP.
“Just as the major advanced economies need to keep working to preserve stability among reserve currencies, emerging economies need to allow for currencies that are market driven,” Obama said in a press conference in Seoul following the second day of meetings, in a transcript released by the White House.
“All of us need to avoid actions that perpetuate imbalances and give countries an undue advantage over one another,” he said, with an eye toward China’s current foreign exchange policies. “We will continue to closely watch the appreciation of China’s currency.”
Some nations questioned the U.S.’s recent quantitative easing (QE2) measures undertaken by the Federal Reserve, and the U.S. central bank, to pour more than $600 billion of liquidity into the financial markets.
The measure served to lower the value of the U.S. dollar against a basket of foreign currencies. Both Germany and China’s finance ministers criticized QE2, calling it unsound monetary policy that could devalue the dollar.
The criticism comes mere months after the European Union itself began an even bigger quantitative easing plan to purchase each other’s sovereign debt and Irish bank notes. China, on the other hand, has long micromanaged the value of its currency against the dollar.
[b]Korean Trade Agreement Not Reached
The United States also failed to secure a renegotiated free trade agreement with South Korea, anticipated by some lawmakers and eagerly awaited by U.S. industry officials.
Deputy National Security Adviser for International Economic Affairs Mike Froman said that access to the Korean market by U.S. automakers remains a key obstacle, according to remarks given to Detroit Free Press.
“Autos is a major issue, a major outstanding issue. And we’ve spent a great deal of time on autos in the last four days, and we'll be continuing to work on that issue as we go forward,” he said. Ford Motor Co. and Chrysler Group have been pressing U.S. officials to work out an agreement as the companies have limited access to the Korean domestic market. General Motors Co. has had a Korean subsidiary in Daewoo since 2001.
A free trade agreement would give U.S. industries and businesses greater access to the Korean market for U.S. automakers, manufacturers, and the agriculture industry. Businesses also claim that a free trade agreement would increase production and create jobs.
“The U.S. dairy industry will gain immediate open access for whey for feed uses, as well as tariff-free access for
approximately 16,000 metric tons of cheese, milk powders, whey for food uses, and other important dairy products,” said Clay Hough, vice president at the Washington-based International Dairy Foods Association, in a statement.
U.S. business lobbies—including lawmakers and the Steelworkers Union—have long argued that cheap Chinese currency has cost American jobs.
But global leaders, including Chinese President Hu Jintao and German Chancellor Angela Merkel, rebuffed a currency plan proposed by Korea and strongly backed by the United States, which would have set limits on a country’s currency reserves and cap trade surplus at 4 percent of GDP.
“Just as the major advanced economies need to keep working to preserve stability among reserve currencies, emerging economies need to allow for currencies that are market driven,” Obama said in a press conference in Seoul following the second day of meetings, in a transcript released by the White House.
“All of us need to avoid actions that perpetuate imbalances and give countries an undue advantage over one another,” he said, with an eye toward China’s current foreign exchange policies. “We will continue to closely watch the appreciation of China’s currency.”
Nations Critical of Quantitative Easing
Some nations questioned the U.S.’s recent quantitative easing (QE2) measures undertaken by the Federal Reserve, and the U.S. central bank, to pour more than $600 billion of liquidity into the financial markets.
The measure served to lower the value of the U.S. dollar against a basket of foreign currencies. Both Germany and China’s finance ministers criticized QE2, calling it unsound monetary policy that could devalue the dollar.
The criticism comes mere months after the European Union itself began an even bigger quantitative easing plan to purchase each other’s sovereign debt and Irish bank notes. China, on the other hand, has long micromanaged the value of its currency against the dollar.
[b]Korean Trade Agreement Not Reached
The United States also failed to secure a renegotiated free trade agreement with South Korea, anticipated by some lawmakers and eagerly awaited by U.S. industry officials.
Deputy National Security Adviser for International Economic Affairs Mike Froman said that access to the Korean market by U.S. automakers remains a key obstacle, according to remarks given to Detroit Free Press.
“Autos is a major issue, a major outstanding issue. And we’ve spent a great deal of time on autos in the last four days, and we'll be continuing to work on that issue as we go forward,” he said. Ford Motor Co. and Chrysler Group have been pressing U.S. officials to work out an agreement as the companies have limited access to the Korean domestic market. General Motors Co. has had a Korean subsidiary in Daewoo since 2001.
A free trade agreement would give U.S. industries and businesses greater access to the Korean market for U.S. automakers, manufacturers, and the agriculture industry. Businesses also claim that a free trade agreement would increase production and create jobs.
“The U.S. dairy industry will gain immediate open access for whey for feed uses, as well as tariff-free access for
approximately 16,000 metric tons of cheese, milk powders, whey for food uses, and other important dairy products,” said Clay Hough, vice president at the Washington-based International Dairy Foods Association, in a statement.
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