US confident G20 will back new trade scheme
US Treasury Secretary Timothy Geithner said today he was confident China and other countries would support a global trade rebalancing plan at an upcoming G20 summit.delhi Updated: Nov 08, 2010 20:00 IST
US Treasury Secretary Timothy Geithner said on Monday he was confident China and other countries would support a global trade rebalancing plan at an upcoming G20 summit.
The United States is urging the Group of 20 major industrial and developing nations to let the International Monetary Fund develop guidelines that would act as an "early warning system" to avert excessive trade imbalances.
"I am very confident you are going to see very strong consensus on this basic framework," including from the Chinese, at a G20 meeting later this week, Geithner told a business audience in New Delhi.
The treasury secretary was in the Indian capital accompanying President Barack Obama on a three-day official visit.
The rebalancing framework proposal comes as trade tensions have been mounting between China and the United States as well as between other nations that have been seeking to protect export-driven growth.
Geithner said that the United States would not seek specific targets to deal with imbalances, noting the need for a "broad consensus" to develop policy.
"You can't set quantitative targets for external balances -- it makes no economic sense," he said.
At the same time, Geithner said countries needed to avoid excessive trade imbalances to avoid the threat of protectionism and global currency wars.
Last month in a letter to his G20 colleagues, Geithner urged nations running big trade surpluses to change their exchange rate policies. He did not name the countries, but China was widely interpreted as the target.
He suggested countries should aim to reduce surpluses or deficits to a targeted share of gross domestic product over coming years. Officials said the target would be four percent of GDP by 2015, a proposal China rejected.
The United States has been targeting China's hefty current account surplus as it presses the country into allowing its currency to appreciate.
Geithner said before the global financial crisis too many countries sought to manufacture for export rather than for domestic consumption, relying on a few nations to import more than they sold abroad.