NAM: G20 Agreement Is a Step Forward but No Magic Wand
3 Nov, 2010
Challenges Remain with Implementation and Coordination Among Global Nations
The National Association of Manufacturers (NAM) Vice President for International Economic Affairs Frank Vargo commented on the Group of 20 (G20) finance ministers’ agreement on currency and global rebalancing:
“The agreement over the weekend from the G20 finance ministers establishes the necessary framework, but is in no way a magic wand to resolve the underlying problems. The G20’s effort to obtain a multilateral solution to currency problems is essential, but we believe it cannot be seen as the only way to press China to appreciate its currency.
While it is positive that G20 leaders have recognized the seriousness of today’s trade imbalances and that a multilateral agreement is preferable to unilateral action, the key to success remains the implementation of these principles and continued coordination. Large surplus countries like China and Germany need to increase domestic demand and move away from an economic model dependent on exports for growth, and large deficit economies like the United States and some European countries need to take steps to save and export more.
This will not be easy, as there are conflicting priorities within countries. While a new architecture is being constructed, we hope the United States will be joined vocally by the other members of the G20 in calling for China to accelerate its currency appreciation.”
Manufacturers are responsible for two-thirds of all exports and believe export growth is key to our nation’s economic success. The NAM’s ‘Blueprint to Double Exports in Five Years’ points out that currencies must reflect economic fundamentals.” To read the NAM’s blueprint, visit www.nam.org.