Finance ministers from the Asia-Pacific region agreed Saturday to avoid using their currencies as trade weapons and embrace steps to shrink global trade gaps, joining the swelling chorus of world leaders calling for deeper cooperation to safeguard global growth.
The two-day gathering of finance chiefs from the 21-member Asia-Pacific Economic Cooperation, or APEC, forum served as a prelude before heads of state converge for twin summits next week in Asia where the agenda will be heavy on economic matters.
APEC members will boost multilateral cooperation and "pursue the full range of policies conducive to reducing excessive imbalances and maintaining current account imbalances at sustainable levels," the finance ministers said in a joint statement.
They also vowed to move toward "more market-determined exchange rate systems that reflect underlying economic fundamentals" and to refrain from competitive devaluation of currencies.
Leaders from the Group of 20 major economies — including President Barack Obama, Chinese President Hu Jintao and Japanese Prime Minister Naoto Kan — will meet in Seoul, South Korea, next Thursday and Friday. About half will then travel to Yokohama, Japan, for the APEC leaders' summit starting Nov. 13.
The economy will be a top priority as countries seek ways to form a united front against threats faced by the fragile global recovery. Growth is slowing around the world, and currency tensions have led to new strains between governments.
The Obama administration says China's currency, the yuan, is undervalued, giving Beijing an unfair trade boost by making Chinese goods cheaper in the U.S. and elsewhere. Beijing accuses Washington of using easy monetary policy to devalue the dollar. Meanwhile, emerging economies like Brazil accuse both the U.S. and China of keeping their currencies weak to the detriment of the developing world.
Large trade gaps exist, for example, between the United States, which buys far more than it sells to the rest of the world, and developing countries, such as China, which are running big trade surpluses.
U.S. Treasury Secretary Timothy Geithner had pushed his G-20 colleagues to back a proposal to limit current account surpluses and deficits to less than a certain percentage of gross domestic product.
Ultimately, however, the G-20 could only agree that progress would be "assessed against indicative guidelines to be agreed," reflecting the opposition of some export-reliant countries such as Japan.
Exactly what those guidelines will be has been a point of contention, and it's uncertain whether an agreement can be forged in time for the G-20 leaders' summit.
Geithner clarified his position Saturday, saying his proposal was intended to "build a framework for cooperation" that reduced risks to growth. He said he was not pushing a specific numerical target, contrary to recent reports.
"No reasonable person who understands economics could suggest that you could best achieve this objective by trying to impose quantitative limitations or targets," he said.
The APEC finance ministers also released a growth strategy for the region that they will submit to the leaders' summit. It calls for more sustainable and balanced growth, sound fiscal management and finance for infrastructure and small businesses.
APEC is comprised of countries that border the Pacific Ocean, including advanced economies such as the U.S., Japan and Australia and emerging economies such as China, Vietnam and Mexico. The represent 41 percent of the world's population and 54 percent of world GDP.
It operates on a consensus basis, with commitments that are voluntary and nonbinding.
- emerging economies
- reasonable person
- U.S. Treasury Secretary Timothy Geithner
- the Pacific Ocean
- united front
- President Barack Obama
- Chinese President Hu Jintao
- Japanese Prime Minister Naoto Kan