Source: The Canadian Press<\/i>
Prime Minister Stephen Harper and his wife Laureen stepped off the plane in South Korea on Wednesday, and into a raging debate about how to revitalize the global economy.
In two Asian summits this week, Harper is pushing for bold, co-ordinated economic action — first at the Group of 20 summit in Seoul, and then at the Asia-Pacific Economic Co-operation meeting in Yokohama, Japan.
The Canadian leader has set a high bar for success at this week\u2019s G20 summit — one that looks increasingly hard to reach.
Harper wants to see concrete commitments from the world\u2019s key economic actors this week, to stabilize the global economy and set the path for steady growth in the years to come.
But momentum for a deal on how to stabilize the global economy at the summit in Seoul is flagging.
\u201cWe must continue to avoid the temptation of unilateral action in response to the current pressures now weighing on the global economy,\u201d Harper pleaded with his G20 colleagues in a letter sent last week.
\u201cI strongly believe that co-operative and co-ordinated actions are both in our national interests and will lead to a stronger global economy.\u201d
An earlier consensus that the world\u2019s economic powers should frame an action plan around a U.S. idea to constrain extreme surpluses and deficits is unravelling.
And now, surplus countries are chastising the United States for launching another round of so-called quantitative easing — this time, a $600-billion bond purchase by the Federal Reserve that amounts to printing money.
China, Germany and Brazil, among others, are concerned that the U.S. move will devalue the American dollar, sending waves throughout the world, and especially to those countries that hold a lot of U.S. dollars.
\u201cThe dollar\u2019s strength ultimately rests on the fundamental strength of the U.S. economy,\u201d President Barack Obama wrote to G20 leaders in a letter this week, urging them to understand the state of the U.S. economy and the need to work together.
Canada, however, is remaining faithful to its neighbour and largest trading partner. Canadian officials will argue at the G20 summit that the world needs to take the United States at its word when it says its economy needs a boost.
And since Washington can\u2019t afford any more fiscal stimulus programs, and interest rates are already at rock bottom, quantitative easing is the only tool it has left.
Plus, if China and others didn\u2019t insist on having an exchange rate pegged to the U.S. dollar, it wouldn\u2019t matter so much what the Fed did, Canadian officials have pointed out.
\u201cMonetary policy suitable for United States may not be appropriate for most other countries. However, those countries with relatively fixed exchange rates and relatively open capital accounts are acting as though it is,\u201d stated Bank of Canada governor Mark Carney in a recent speech.
\u201cIf this divergence in optimal monetary policy stance persists, the existing strains on the system will grow.\u201d
Now that China has succeeded in beating back the U.S. proposal for targeting countries\u2019 trade and investment balances with the world, it\u2019s up to China to come up with a better idea, the Canadian argument goes.
Already, the G20 has delivered on many of China\u2019s asks. Countries are well on their way to strengthening their banking systems, with a complete deal on regulations and oversight to be approved by leaders at the summit this week.
Advanced countries agreed at the G20 summit in Toronto in June to bring down their deficits by 2013, and put their debt loads on a stable or downward track by 2016.
And last week, the G20 agreed to re-jig the balance of power at the International Monetary Fund so that China, India, Brazil and Russia would have the kind of say that reflects their newfound economic prowess.
So now, it\u2019s time for China to show some leadership.
Harper will be pounding the pavement at Seoul, and later in Japan, to build up support for solid action on the global economy.
He has a jam-packed schedule, meeting one-on-one with about 15 heads of state. In the bilateral meetings, he wants to push for commitments to keep deficits under control, allow exchange rates to float freely, keep protectionism at bay, and resolve the trade and finance imbalances that threaten to destabilize the global economy once again.
He\u2019ll also be pushing more free-trade talks around the Pacific Rim, and asking for help on dealing with human smuggling.
Before the two-day G20 summit starts Thursday night, Harper plans to attend a Remembrance Day ceremony in South Korea, along with British Prime Minister David Cameron and Australian Prime Minister Julia Gillard.<\/p>\n","protected":false},"excerpt":{"rendered":"
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