The most recent meeting of the Group of 20 concluded in mid-November without achieving many of the participant’s concrete aims.
The Seoul Summit Leaders’ Declaration included phrases on remaining “determined” and “vigilant”, to “pledge coordinated efforts” and “promote job creation”. There were even sections addressing (Chinese) currency valuation, (American) capital flows and (European) trade protectionism. Most notably, the G-20 leaders all signed that:
“We will 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. Advanced economies… will be vigilant against excess volatility and disorderly movements in exchange rates. Together these actions will help mitigate the risk of excessive volatility in capital flows facing some emerging market economies.
“We will refrain from introducing, and oppose protectionist trade actions in all forms… We reaffirm our commitment to avoid financial protectionism.”
Yet none of these statements clarifies any of the 20 nations’ specific commitments, targets or planned actions. As Newsweek reported, “The messiness of the negotiations was made clear by the nebulousness of the final press releases, which left enough wiggle room for all 20 nations to sign.”
China gave no ground on its controlled currency appreciation, which has hindered the ability of other exporting nations to compete. The US was unable to promise that the Federal Reserve would refrain from purchasing US Treasury bonds, which the Christian Science Monitor notes would consequently reduce interest rates, turning global investors onto emerging economies.
Even if the leaders had stuck their necks out and offered to make the first compromise, none of the G-20 declarations are legally binding for signatory nations.
Economies that were not too long ago a case of all action and no talk now seem to be a case of all talk and no action. Let us hope that the coming year will help these 20 major economies to strike a balance between the two.
