G20 Seoul Summit closes with compromises on contentious issues
Leaders of the world's major developed and developing economies left the G20 summit venue in southern Seoul on Friday afternoon with a joint communique featuring obvious compromises on contentious issues.
The two-day Seoul Summit was held amid tension among G20 countries over several issues, including trade imbalances and currency policies. There had been even talks of so-called currency war.
It was further complicated by the U.S. Federal Reserve's move, called "quantitative easing", to inject 600 billion U.S. dollars into the U.S. economy to spur growth. The move had caused uproar among G20 countries such as Germany, South Africa, China and Brazil.
Attending the Seoul Summit were leaders from the G20 member countries, the European Union, the IMF, the World Bank, the UN, the World Trade Organization, the OECD, the African Union, and the International Labor Organization, as well as from five non-G20 countries -- Ethiopia, Malawi, Singapore, Spain and Vietnam.
Chinese President Hu Jintao attended the summit, accompanied by Vice Premier Wang Qishan.
Communique With Compromises
"For now, in conclusion, (the world) is out of the so-called currency war," South Korean President Lee Myung-bak told a press conference after the Summit.
According to the communique issued at the end of the summit, the G20 members said they would move toward more market-determined exchange rate systems and enhance exchange rate flexibility to reflect underlying economic fundamentals and refrain from competitive devaluation of currencies.
But when G20 countries are facing undue burden of adjustment, policy responses in emerging market economies with adequate reserves and increasingly overvalued flexible exchange rates may also include carefully designed macro-prudential measures, it said.
Over the trade imbalances, the G20 members said they would enhance cooperation to reduce trade imbalances and maintain imbalances at sustainable level. They would also develop indicative guidelines composed of a range of indicators, which will serve as a mechanism to facilitate identification of large imbalances that required preventive and corrective actions.
At the same time, the G20 members said they would refrain from introducing, and oppose protectionist trade actions in all forms, and recognize the importance of a prompt conclusion of the Doha negotiations.
Prior to Seoul Summit, the U.S. had pressed the G20 to address the trade imbalances by setting limits on trade surpluses and deficits at about 4 percent of the gross domestic product.
The U.S. demand was refused by several G20 members, including Germany. German Chancellor Angela Merkel said Thursday that it was necessary to reduce excessive trade imbalances, but it was unnecessary to set a numerical target for them.
As to concerns among emerging economies over the flooding of liquidity following U.S. monetary easing, the G20 said current volatility of capital flows was reflecting the differing speed of recovery between advanced and emerging markets.
National, regional and multilateral responses are required. And better global financial safety nets can help, said the communique.
The joint communique came after the six plenary sessions of discussion among G20 leaders.
During the first session, South Korean President Lee said there had been "big progress" in the negotiations to narrow wide differences over how to manage trade imbalances and currencies, which had clearly paved the way for the communique.
Then, Lee did not elaborate on what the progress was.
But a South Korean government source, quoted by the Yonhap news agency, said the negotiators had come close to agreement to seek " more market-determined exchange rate systems," increase flexibility of their currencies, and to create a guideline on sustainable trade imbalances by the next meeting in 2011 in France.
About one hour before the first session, however, a South Korean spokesman told reporters that envoys of the G20 members had still been unable to reach agreements on details of the currency and current account imbalance issues following overnight negotiations.
According to South Korea's G20 preparation committee spokesman, Kim Yoon-kyung, vice finance ministers and personal representatives of the leaders, dubbed the "Sherpa" group, had been trying to come to agreement, but there were still some contentious issues.
In his speech at the Summit, Chinese President Hu had put forward a four-point proposal for realizing strong, sustainable and balanced growth of the world economy.
First, the world community should improve the framework for strong, sustainable and balanced growth and promote cooperative development, Hu said.
"Strong, sustainable and balanced economic growth is of great significance to the whole world."
"We should stick to the country-led principle, take into full account the different national circumstances and development stages of various members, and appreciate and respect each country 's independent choice of development path and policies," he added.
Second, the world community should champion open trade and promote coordinated development, Hu said.
"We must be firmly committed to free trade, to the consensus reached at previous G20 summits, and to the effort of opposing all forms of protectionism and removing existing trade protectionist measures," he said.
Third, the world community should reform the financial system and promote stable development, Hu said.
"We should continue to push for fair and merit-based selection of the management of international financial institutions, and enable more people from developing countries to take up mid-level and senior management positions," he said.
Fourth, the world community should narrow the development gap and promote balanced development, the Chinese president said.
"We must endeavor to build a new and more equal and balanced global partnership and encourage developed and developing countries to have more mutual understanding and closer coordination rather than follow the old path of trading accusations and public confrontation," Hu said.
The Seoul Summit was the fifth meeting of the G20 heads of government, to discuss the global financial system and the world economy, since they first met in November of 2008 to discuss joint responses to the U.S.-originated financial crisis that was rocking the world economy at the time.
Between the Washington Summit and the Seoul Summit were the London Summit in April of 2009, Pittsburg Summit in September of 2009, and Toronto Summit in June of 2010.
The G20 was established in 1999 to bring together strategically important industrialized and developing economies to discuss key issues in the global economy.
It includes Argentina, Australia, Brazil, Britain, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea, Turkey, the United States, and the European Union (EU).
Together, the G20 members represent around 90 percent of global gross national product, 80 percent of world trade, including EU intra-trade, and two-thirds of the world's population.
[Source: By Xinhua reporter Lin Jianyang, Xinhua, Seoul, 12Nov10]
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