G-20 begins talks on agenda issuesVice finance ministers from G-20 countries met yesterday at COEX in southern Seoul to finalize the key agenda items for the G-20 Summit, which begins Thursday.
Expected to be included in the “Seoul Declaration,” to be released on Friday, are foreign exchange policies, ways to curb current account imbalances and the establishment of a global financial safety net being promoted by Korea.
The vice ministerial talks, which will run through late Thursday, will deliberate on an initial draft that was circulated by Korea over the weekend to all the G-20 members.
The draft was based on the communique released after a meeting of G-20 finance ministers and central bank governors in Gyeongju last month.
The vice ministers are expected to discuss setting a ceiling on the surplus or deficit of current accounts as well as putting an end to competitive currency devaluations. But the outcome for success appears slim.
“It is expected to be difficult to make progress on reaching agreement on current account guidelines because large disagreements remain,” a senior government official said. “However, there is a widespread recognition that a worsening in the currency debate could hurt the recovery of the global economy.”
China, Germany and Japan - all of which have large current account surpluses - already have reservations about a proposal made by U.S. Treasury Secretary Timothy Geithner last month at the Gyeongju meeting to limit surpluses or deficits to 4 percent of the current account.
The U.S. has since retreated from setting a specific numerical guideline, and Geithner said last week that he is unsure that G-20 members can reach a consensus. “It’s not something you can reduce easily to a single number,” Geithner said. “It’s not desirable, necessary and it’s not likely at this stage,” he said.
Proposals coming out of the vice ministerial meetings will be passed on to the G-20 leaders, who are expected to discuss them on Thursday, during a dinner meeting that evening.
In addition, on the currency and current account issues, vice ministers are expected to agree on a “standstill” arrangement for trade protectionist measures and work out details for the “Seoul Action Plan,” which establishes a framework for countries to pursue monetary and trade policies to promote balanced global growth.
Korea’s global financial safety net initiative is based on the International Monetary Fund providing precautionary credit lines to help ease emergency liquidity problems.
By Limb Jae-un [firstname.lastname@example.org]