Debate over redressing major international financial issues stemming from China’s rapid expansion and the US’s deficit woes have spilled over at a G20 meeting in Seoul.
South Korean spokesman Kim Yoon-Kyung says each country’s deputy financial minister was sticking to their original position, with voices raised, and no compromises forthcoming.
“Voices were raised,” Kim said. “They wouldn’t compromise. They actually had to keep the door open because the debate was so heated and we were lacking oxygen.”
The deputies were meeting anew on Wednesday to thrash out the summit communique that will be adopted by leaders, including the US and Chinese presidents, on Friday.
At best, South Korean officials suggested, the G20 may settle for a watered-down deal to task the International Monetary Fund with crafting guidelines to trim the yawning imbalances in world trade.
Free Trade on agenda
Leaders of G20 nations have been arriving, with the call for international engagement and a reinvigorated free trade push preceding them.
Indian Prime Minister Manmohan Singh warned Monday of the dangers of complacency over financial regulation and the siren call of protectionism as he left for the G20 summit.
“Given the vast development challenges we face, it is in India’s interest to have an open, stable and rule-based international economic environment, whether in the field of trade, investment flows, technology transfers or open markets,” Singh said in a pre-departure statement.
Disputes over foreign exchange rates and the world’s lopsided trade are set to dominate discussions at the two-day meeting of leaders of 20 major industrial and developing nations in Seoul.
“We have to be particularly wary of protectionist sentiments,” the Indian premier added.
He was joined in his sentiments by British PM David Cameron, saying free trade was “the best future for our world economy”, AFP reported.
Cameron urged European countries to be “open to trade from China and not putting up trade walls”, saying London and Beijing were on the same side in the fight against protectionist measures.
“We are two countries that together in the G20 and elsewhere will be fighting against protectionism, fighting against countries that want to put barriers up,” the British PM said before a business summit in Beijing.
Federal Treasurer Wayne Swan also kept up the calls before departing for Seoul, where he will join Julia Gillard.
“International engagement remains as important now as it was at the height of the global crisis,” Mr Swan said in a statement on Wednesday.
Regulation on cards
The summit is also expected to see heated debate on the issue of regulatory reforms of the financial sector.
“This is a key area of work, and we must guard against complacency in the pursuit of a strong financial regulatory framework and effective supervision,” Singh said.
G20 finance ministers last month tried to cool down talk of a currency war by vowing to move towards more market-determined exchange rate systems and undertook to refrain from “competitive” currency devaluations.
“There are developmental imbalances within and between countries, and rebalancing of the world economy is a major challenge,” Singh said.
Wayne Swan will be in South Korea on Thursday and Friday, where he will also attend the Seoul G20 Business Summit, or `B20′, with Ms Gillard.
The treasurer said the summit comes at a time when the global economic recovery remains “patchy and uneven”.Forgetting the poor
But away for the headlines, there have been calls not to forget the world’s poor.
UN Secretary-General Ban Ki-Moon has appealed to the G20 not to forget another part of its summit business, reformulating aid for the world’s poorest nations.
Meanwhile, World Vision chief Tim Costello says Australia can play a critical role in securing long-term food supplies for the world’s poorest nations.
Reverend Costello says the summit’s a golden opportunity for Prime Minister Gillard to establish her foreign affairs credentials.
He says World Vision research shows many of the factors that push up food prices are worse now than on the eve of the 2008 food crisis, which pushed 100 million people into hunger and triggered violent food riots in up to 20 countries.