G-20 Leaders: Yardsticks Needed For Trade Imbalances
STEVE INSKEEP, host:
It's MORNING EDITION from NPR News. I'm Steve Inskeep.
It was fitting that President Obama visited East Asia for an economic summit this week. It was fitting because that's where a lot of America's money seems to be going. Among other things, leaders of the world's largest economies were discussing big trade imbalances. Some of the biggest involve U.S. trade deficits with Asian economic powers.
NPRs Scott Horsley has been covering the G-20 summit in Seoul, South Korea. He's on the line from there.
Scott, what bothers the leaders about the trade imbalances most?
SCOTT HORSLEY: Well, you know, Steve, for a long time and a lot of countries got rich by exporting goods to the U.S. while American consumers went deeper and deeper into debt. There's a theory that that helped plant the seeds for the economic meltdown. World leaders here at the G-20 feel like theyve done a good job navigating through that meltdown, but they're worried now that the recovery that's followed has been uneven.
This is how President Obama described it during a post-summit news conference.
President BARACK OBAMA: Many advanced economies are growing too slowly and not creating enough jobs. Some countries are running large surpluses, others running large deficits. Put simply, we risk slipping back into the old imbalances that contributed to the economic crisis in the first place and which threaten global recovery.
INSKEEP: That's President Obama, talking at the G-20 summit. And we're speaking with NPR's Scott Horsley, who's been covering that summit.
And Scott, what can the leaders agree to do about this?
HORSLEY: Well, they have not yet agreed what to do about these imbalances. What they have agreed to do is develop some yardsticks to help them know when a country is running too big a deficit or too big a surplus. As of now, they have not attached any numbers to that yardstick. There had been talk maybe they would say if a deficit was four percent of GDP, that would be the trigger. They're not saying that yet, but a senior administration official tells us eventually there are going to have to be some numbers attached to these yardsticks. What the G-20 members have agreed to do is develop the yardsticks sometime in the first half of next year and then actually start measuring countries for deficits and surpluses sometime in 2011.
INSKEEP: Okay. I've got this image in my mind, Scott. A yardstick, no numbers, it's blank. It's a piece of wood.
(Soundbite of laughter)
INSKEEP: They also pledged to, quote, "refrain from competitive devaluation of currencies." Would you translate that for us, please?
HORSLEY: Well, there's been a lot of grousing, of course, for years that China has kept its currency artificially low, giving Chinese exporters a competitive advantage in the world economy. That was a big topic yesterday when President Obama met with Chinese President Hu Jintao. So far there's been no penalty leveled against China for that, although the administration said they've seen some progress. The Chinese currency has begun to appreciate the little bit more since September and they expect to see more appreciation before President Hu comes to Washington for a visit in January.
Ironically, in the run-up to this summit meeting, we were hearing criticisms leveled against the U.S., that the Fed's action to prop up the U.S. economy was artificially devaluing the dollar, the same complaints that the U.S. has leveled against China. President Obama's retort is the Fed's intention was not to artificially devalue the dollar, and anyway, the best thing the U.S. can do for the world economy is to grow faster, he says.
INSKEEP: We're about to hear from NPR's Mara Liasson about the domestic political effects of the election the Democrats lost last week. But youre there in Seoul with the president. How has it affected his international standing, that the president was delivered what he called a shellacking?
HORSLEY: He insists that he has not been handicapped by that. He reminds reporters that even when he first came into office at the height of his popularity, the G-20 didn't necessarily fall in line behind what the United States wanted. And he joked that it was difficult talking to the Chinese president about currency disputes even when his polling numbers were 20 points higher.
INSKEEP: NPR's Scott Horsley in Seoul, South Korea. Scott, thanks for your work.
HORSLEY: Good to be with you.
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