G20 LEADERS ENDORSE SWEEPING I.M.F. REFORMS / PAC RIM PUSHES FREE TRADE
[PHOTO AT LEFT - AP Nov. 13: President Obama, left, talks with Thai Prime Minister Abhisit Vejjajiva as they attend the Leaders Retreat during the APEC summit in Yokohama, near Tokyo.]
SEOUL, SOUTH KOREA, NOVEMBER 14, 2010 (STAR) G20 leaders yesterday gave their backing to sweeping reforms designed to give emerging economies such as China a bigger say in the International Monetary Fund.
The leaders of advanced and emerging economies announced they were delivering “a modernised IMF that better reflects the changes in the world economy through greater representation of dynamic emerging markets and developing countries”.
The reforms would enhance its “legitimacy, credibility and effectiveness, making it an even stronger institution for promoting global financial stability and growth”, the G20 leaders said in a summit declaration in Seoul.
The IMF’s executive board had agreed to the changes — described as “historic” by managing director Dominique Strauss-Kahn — at its own meeting last week.
They create “the biggest-ever shift of influence in favour of emerging market and developing countries”, Strauss-Kahn said then.
The fund, formed after World War II to remake the world financial system and prevent a 1930s-style Depression, has long been dominated by Western powers but has faced growing calls to adapt.
The deal to reform its 24-member board of governors was thrashed out by G20 ministers last month ahead of this week’s summit.
Europe has agreed to give up two seats.
Just over five percent of voting rights will be transferred, and Brazil, Russia, India and China will all be among the top 10 IMF shareholders.
China will move up to the third-largest shareholder, from sixth place.
The total size of the quotas — the contributions of the 187 member states to the fund’s capital — will be doubled, to 756 billion dollars.
As part of efforts to rebalance the world economy, G20 leaders also tasked the IMF with advising on proposed “indicative guidelines” to help identify large current account imbalances that require corrective action.
“We will not have any way to force countries to implement our guidelines,” Strauss-Kahn told reporters Friday in Seoul.
“We have no police, no army. The strength of the IMF relies on the strength of the truth. The IMF is not going to be the dictator of the world economy.”
Upon his arrival at the IMF in 2007, Strauss-Kahn made quota redistribution a top priority, to resolve a long and bitter battle by emerging-market and developing countries to wrest greater power.
When a previous quota reform plan was officially adopted by member states in April 2008, he hailed it as “the beginning of the new legitimacy of the Fund.”
But that reform has not been enacted due to the lack of a sufficient number of ratifications by member states.
After G-20 rancor, Pac Rim leaders push free trade (philstar.com) Updated November 13, 2010 08:44 PM Comments (0)
YOKOHAMA (AP) — Leaders of the world's three biggest economies — the US, China and Japan — all pledged Saturday to push for free trade, apparently putting aside acrimony over currencies that threatens to revive pressure to raise trade barriers.
The promises not to backslide into retaliatory trade tactics came at an annual summit of Pacific Rim leaders, just a day after a divisive summit of the Group of 20 major economies in South Korea.
Speaking to a conference on the sidelines of the summit of the Asia-Pacific Economic Cooperation forum in Yokohama, Chinese President Hu Jintao vowed to keep his country's markets open and seek more balanced trade, while gradually adjusting the value of the Chinese currency — which Washington complains is undervalued.
"The international community should oppose protectionism in all manifestations," Hu said in a speech that avoided overt references to spats with the US or Japan over currency policies and other issues.
Though they may differ over details, the leaders from APEC — which represents more than half of global economic production and two-fifths of world trade — appear united in supporting more open markets.
Hu and his host, Japanese Prime Minister Naoto Kan, held a 22-minute meeting Saturday on the sidelines of the APEC summit, despite frosty relations due to conflicting claims over islands in the East China Sea. Tokyo and Beijing have sparred recently after a Chinese trawler collided with two Japanese coast guard vessels near the disputed islands east of Taiwan.
Thousand of anti-China protesters rallied outside the heavily guarded APEC venue Saturday, waving big Japanese flags and placards with slogans reading "Defend our territory" and "Defeat Chinese imperialism."
"I think China is a threat to Japan," said Sayo Kuroda, a 19-year-old college student whose family joined the protest.
Kan also was to meet with Russian President Dmitry Medvedev, who recently angered Japan by visiting an island off its northern coast that both nations claim.
Many in Japan and elsewhere in the region are looking to the US as a counterweight to China's growing influence and sometimes aggressive stance.
But the main focus of the APEC meetings will be devising ways to leverage more open trade for the sake of future growth.
During their summit, the leaders are expected to agree to take concrete steps toward a Pacific-wide free trade zone that would slash tariffs and other barriers to exports.
"Achieving free and open trade and investment is the surest way to accomplish common prosperity and greater stability in the Asia-Pacific region," declares a draft of the summit's final statement, obtained by The Associated Press.
In a striking change from previous Japanese administrations, Kan has promised to further open Japan's sluggish economy, despite protests from farmers who fear the loss of subsidies and protective tariffs.
"We have to grow with the fast developing economies of the Asia-Pacific," Kan said. "We will liberalize our trade."
Asia's robust and resilient growth has hinged on trade, and the US is eager to tap into that dynamism, said President Barack Obama.
"In this region the United States sees a huge opportunity to increase our exports to some of the fastest growing markets in the world," Obama told the APEC conference. "For America this is a job strategy."
At a divisive Group of 20 summit in Seoul, South Korea, Obama failed to win support for an open call for Beijing to more quickly raise the value of its currency.
And though about half the leaders from the G-20 meeting traveled on to Yokohama, there was no sign that the ill-will shown in Seoul had carried over to the APEC summit, where meetings on the sidelines are considered an vital part of its annual program.
Currencies, however, appeared to get more attention than they normally do at APEC meetings.
The leaders' draft statement notes a need to reduce trade imbalances and government debt to help ensure stable and sustainable economic growth, and includes a pledge to move toward more "market-determined exchange rate systems."
"That takes into account the concerns of many countries outside of the US and China that have seen their currencies appreciate rapidly over the last two months. It's reflective of the views outside of the US and China," said Philippine presidential spokesman Ricky Carandang.
In the draft, the leaders also promise to reduce risks of disruptions from speculative capital, such as the huge flows of cash many in the region fear may flood their markets, driving their own currencies higher and prices higher, due to moves by the US Federal Reserve to stimulate the US economy by printing money.
Chief News Editor: Sol Jose Vanzi
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