After watching G20 summit
By Jay Kim
The G20 Seoul Summit ended on Nov. 12 with an agreement by the leaders of the participant countries over the core issue of exchange rates.
The countries decided that the rates would be determined by the market, an agreement not much different from the last G20 meeting of finance ministers and central bankers in Gyeongju.
While this market-determined currency exchange system is not a bad idea, it has left out U.S. Treasury Secretary Timothy Geithner’s bold proposal to keep a surplus or deficit of the current-account balance of a country below 4 percent of its GDP.
This system, without Geithner’s proposal, feels like flat beer to me; I think it was left out because of strong opposition from China and Germany.
The failure of the U.S. to carry out its current-account balance proposal has led to speculation that President Obama’s power has decreased on a global level after the crushing defeat of his Democratic Party in the Nov. 3 midterm elections. It’s not just the issue of the current-account balance, either.
The postponement of setting a clear guideline to solve the global economic imbalance to next year’s G20 summit in Cannes, France, is not a good plan either.
The Democrats don’t have much to say against the criticism that they avoided a complicated issue by leaving out concrete plans that would be determined in the later meeting.
I agree with the resolution to refrain from artificial currency devaluations for the purpose of increasing exports. However, I wonder how effective this would be, considering the previous cases of currency devaluation to which each country resorted during its economic crises.
From this perspective, concerns about a China-U.S. trade war still remain, even after the G20 summit. The only positive result seems to be the postponing of crucial issues to next year’s summit, adopting the compromise purely as a stoppage measure.
Obama’s return to the U.S. will not be pleasant, as he is returning empty-handed, without a good result from the G20 summit, and without an agreement from the negotiations for the Korea-U.S. free trade agreement (FTA) ― an agreement he set a deadline to finish by the end of the G20 summit.
It is hard for me to understand Obama’s strong remarks about the FTA, that he could not allow American cars to be blocked by Korea’s non-tariff barriers.
It seems apparent that he is not fully aware that U.S. autos are not popular with Korean consumers, and that the real cause for the failure of the negotiations was the U.S.’s insistence on the additional opening of the Korean beef market, a concession Korea cannot accept.
The Obama administration now faces a predicament. Given the situation, it could be a bad signal to the rest of Asia that Obama left the G20 summit without successful results in the additional negotiations on the Korea-U.S. FTA pact that was signed by both countries in June 2007.
I believe that Korea must do the right thing and help Obama, the president of our core allied country, when he is in trouble.
I also believe it would be better to find a compromise that shies from the hard-line approach of “no renegotiation on beef, even if it costs the FTA.”
Being a Republican, I don’t agree 100 percent with the policies of the Democrat Obama, but I do believe that Korea got all of the major concessions from the G20 summit and the U.S. got nothing.
It’s possible that allowing U.S. beef from cattle over 30 months old could draw criticism in Korea of being pushed around by the U.S., maybe even leading to another candle-light protest.
With that in mind, since the domestic consumption of U.S. beef has been increasing; why not propose a compromise to hold renegotiations on the issue in one year?
Just like how the G20 summit put off complicated issues like exchange rates until next year’s summit, I think it would be appropriate to postpone negotiations on the beef issue between Korea and the U.S. to next year. This is a “win-win” strategy for both countries.
Jay Kim is a former U.S. Congressman. He serves as chairman of the Washington Korean-American Forum. For more information, visit Kim’s website (www.jayckim.com).
The views expressed in the above article are those of the author and do not reflect the editorial policy of The Korea Times.