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Sunday, Nov. 7, 2010
APEC vows to cut global imbalances
KYOTO — Finance ministers from the Asia-Pacific Economic Cooperation forum agreed Saturday to work toward reducing global economic imbalances and avoiding a currency devaluation war, stressing foreign exchange rates must be determined by markets and reflect economic fundamentals.
The ministers of the 21 APEC countries, which account for some 40 percent of world trade and more than half of global economic output, also agreed on concerted efforts to address global trade imbalances in a move that could put pressure on some surplus traders, including China, to move away from undervaluing their currencies as a way to boost exports.
The finance chiefs' agreement was in line with the results of a meeting last month of the Group of 20 finance ministers and central bank governors.
Although some APEC countries are not in the G20, "I think we all were able to share the basic line," Finance Minister Yoshihiko Noda said during a joint news conference.
The communique released after the two-day meeting confirmed the need to strengthen multilateral cooperation to promote external sustainability and pursue policies to reduce excessive imbalances, as the global economy is seeing an uncertain recovery.
"We're trying to make sure as the world economy recovers that future growth is sustainable," said U.S. Treasury Secretary Timothy Geithner.
Geithner also said it is not appropriate to set numerical goals for current account imbalances as a policy target for the G20 leading economies.
"That is not our intention," Geithner told reporters when asked whether the United States would aim to win an agreement on its proposal for capping surpluses and deficits at 4 percent of gross domestic product at a meeting of G20 leaders this week in South Korea.
Geithner made the proposal at the G20 meeting of finance ministers and central bank governors last month in South Korea, only to face opposition from some surplus member economies such as China and Germany.
"Our intention is to keep trying to build support for this and to allow experts to do detailed hard work to build a framework that people will have some confidence (about). That's going to take some time," he said.
The APEC members also shared the stance from the G20 meeting on the recent hot-button issue of currencies and stressed the importance of staying away from the devaluation fight and move toward more market determined exchange rate systems that reflect underlying economic fundamentals.
"Advanced economies, including those with reserve currencies, will be vigilant against excess volatility and disorderly movements in exchange rates," the communique said.
Japan has been struggling with the rise of the yen, which has risen to a 15-year high against the dollar and is hurting its export-driven economy.
Although the government intervened in the currency market Sept. 15 after the yen traded at 82.80 to the dollar, its value has generally kept rising. It traded at 81.25 Saturday morning.
Geithner declined to comment on Japan's intervention.
Noda and Geithner met Saturday, during which they confirmed they will continue to cooperate for the success of the APEC leaders' meeting in Yokoyama and the G20 meeting in Seoul, but they did not talk about individual matters, including currencies and economic imbalances, Noda said afterward.
The APEC meeting drafted a document titled the "Kyoto Report," which focuses on efforts to secure strong, sustainable and balanced growth in the region.
Mirroring the communique, the report says the member counties should refrain from devaluating currencies while stressing the importance of improving public fiscal management, financing for infrastructure, small and midsize businesses and green technologies.
The report will be submitted to the APEC leaders' meeting next weekend in Yokohama.
APEC was formed in 1989 and is a nonbinding international body consisting of 21 members — Australia, Brunei, Canada, Chile, China, Hong Kong, Indonesia, Japan, South Korea, Malaysia, Mexico, New Zealand, Papua New Guinea, Peru, the Philippines, Russia, Singapore, Taiwan, Thailand, the U.S. and Vietnam.
Information from Kyodo added