NYT: “G-20 meeting puts off hard calls on trade imbalances”
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Leaders of the world’s biggest economies agreed on Friday to curb “persistently large imbalances” in saving and spending but deferred until next year tough decisions on how to identify and fix them.
The agreement, the culmination of a two-day summit meeting of leaders of the Group of 20 industrialized and emerging powers, fell short of initial American demands for numerical targets on trade surpluses and deficits. But it reflected a consensus that longstanding economic patterns — in particular, the United States consuming too much, and China too little — were no longer sustainable.
The finance ministers, along with the heads of central banks like the Federal Reserve, are to agree by mid-2011 on “indicative guidelines” for identifying big, persistent imbalances…
The International Monetary Fund will then conduct an analysis of the “root causes” of the imbalances and the damage that they cause, by the next G-20 leaders’ meeting, to be hosted by France late next year. The goal, the leaders said, was to “facilitate timely identification of large imbalances that require preventive and corrective actions to be taken.”
Canada’s prime minister, Stephen Harper, said that currency and trade imbalances were not going to be fixed right away. “It’s fair to say we didn’t resolve those issues here,” he said. “These are not going to be easy issues to resolve but I think we’ve got everyone talking the same language, everyone understanding longer term what has to be done.”
In agreeing to a broad examination of imbalances and their causes, deficit countries like the United States and Britain are opening themselves to criticisms of their debt and deficits. While Mr. Cameron’s Conservative government has pursued a wrenching program of fiscal austerity, Mr. Obama will face a divided Congress locked in bitter disagreement over spending and tax measures.