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What's on the agenda for the G20 meeting?

The Group of 20 advanced and emerging countries that represent 85% of global economic output are meeting in Seoul on November 11 and 12 to ink agreements committing them to avoid "competitive devaluations" of their currencies.

world Updated: Nov 08, 2010 10:45 IST

The Group of 20 advanced and emerging countries that represent 85% of global economic output are meeting in Seoul on November 11 and 12 to ink agreements committing them to avoid "competitive devaluations" of their currencies.

The meeting follows on from October's meeting of finance ministers and central bank governors in South Korea.

What will be agreed?

There was what the organisers termed a hardening of the rhetoric on currencies in the final communique of the finance ministers in October, with a shift to "market determined" exchange rates from "market oriented" in the agreement at the previous summit in Toronto. It also called for countries to avoid "competitive devaluations".

The language of the communique agreed by leaders is unlikely to go beyond that agreed by finance ministers and financial markets are not pricing in any dramatic shift.

World leaders including US President Barack Obama and Chinese President Hu Jintao will also sign a pact to agree what will be presented as a comprehensive framework in which to address global economic imbalances.

The Basel III rules on bank capital and liquidity will be endorsed by the leaders and hailed as a milestone in financial regulation.

There are unlikely to be firm targets on fiscal consolidation, monetary policy, and exchange rate policies. Optimists say the framework will be refined and that this is a good starting point. Pessimists say the communique is just words that are unlikely to be matched by action.

Will there be firm numerical current account targets?

This has been dropped by the US after vocal opposition from China and Germany among others.

The idea was a non-starter and setting a numerical target of 4% of gross domestic product for a country's current account balance was unenforceable in any case.

A greater role for emerging markets?

Enhancing the role of developing countries by giving them greater voting and quota rights in the International Monetary Fund could make them share the burden of resolving global economic problems instead of indulging in unilateral action. That said, this issue will be difficult to police and countries from Brazil to South Korea are all taking measures.

Progress in financial regulation?

Aside from endorsing Basel III world leaders will also sign off on the Financial Stability Board's proposals on dealing with "too big to fail" banks.

However these proposals are expected to be fairly broad with disputes over details, such as the need for additional capital surcharges for large, inter-connected banks, unlikely to be resolved.

France, which takes over as G20 host after Korea, is expected to push for new global rules that curb speculation in commodity markets but some regulators say there is no big appetite among many of the leaders for further reform.

Will there be a trade deal?

G20 members have trumpeted their commitment to free trade and generally have not introduced new protectionary measures. However, some of the fiscal expansion plans recently implemented by countries as they clawed their way out of the global economic slowdown in 2008 and 2009 directly targeted domestic industries. There have also been some non-tariff measures.

In general, it has been surprising that there has not been much protectionism, although a range of G20 economies from Brazil to Indonesia and South Korea have imposed capital controls.

They are unlikely to make sufficient progress to reignite the Doha trade round talks.

What is south korea's development agenda?

It is fairly uncontentious for the countries here, although some of the "excluded" 172 countries do not feel the same. That said, the G20 represents a big step up as a more inclusive group for development than the G7.

Seoul has advanced an eight-pillar development agenda and multi-year action plan for the G20 that has been generally well-received as moving beyond the aid debate and financial targets for donor countries that are rarely met.

Some observers have said that poor developing economies simply cannot mimic South Korea's turbo-charged surge to become a high income economy and that watering down aid's importance will let rich nations off the hook.