I'm a Seoul Man: G-20 Punts on Econ Imbalances

Got what I got the hard way
And I'll make it better each and every day
So honey don't you fret
Cause you ain't seen nothing yet
I'm a Seoul man

As more or less expected given constant quarrels over global economic imbalances, the South Korea G-20 did not produce a definitive deal concerning them just yet. All concerned have decided to leave the matter for finance ministers and central bankers to tackle in the first half of 2011. When in doubt in these sorts of multilateral negotiations, agree not to disagree just yet.

Admittedly, I am somewhat vexed by this outcome even by the desires of large current account surplus-running G-20 members like China and Germany given that the process of recommending remedial action will most likely not be made binding, period. Still, we are where we are which is rather close to where we began. The communique is well worth reading even if it gets a bit tedious and repetitive at times. Below, however is an excerpt describing the key Mutual Assessment Process (MAP)--ostensibly "we're all watching out for each other" as opposed to "the US-dominated IMF watching over you" or something similar to make things more palatable to the likes of China:

[To] enhance the Mutual Assessment Process (MAP) to promote external sustainability. We will strengthen multilateral cooperation to promote external sustainability and pursue the full range of policies conducive to reducing excessive imbalances and maintaining current account imbalances at sustainable levels. Persistently large imbalances, assessed against indicative guidelines to be agreed by our Finance Ministers and Central Bank Governors, warrant an assessment of their nature and the root causes of impediments to adjustment as part of the MAP, recognizing the need to take into account national or regional circumstances, including large commodity producers. These indicative guidelines composed of a range of indicators would serve as a mechanism to facilitate timely identification of large imbalances that require preventive and corrective actions to be taken. To support our efforts toward meeting these commitments, we call on our Framework Working Group, with technical support from the IMF and other international organizations, to develop these indicative guidelines, with progress to be discussed by our Finance Ministers and Central Bank Governors in the first half of 2011 [my emphasis]; and, in Gyeongju, our Finance Ministers and Central Bank Governors called on the IMF to provide an assessment as part of the MAP on the progress toward external sustainability and the consistency of fiscal, monetary, financial sector, structural, exchange rate and other policies. In light of this, the first such assessment, to be based on the above mentioned indicative guidelines, will be initiated and undertaken in due course under the French Presidency.

So the South Koreans are probably glad to have managed to avoid being placed in the global economic imbalances hot seat. Now, the task not falls to the 2011 chairs...the French! Can you imagine Sarkozy and Co. delivering verdicts to Germany to lighten up on its structural surplus sometime later next year? As far as economic diplomacy goes, that's entertainment! (Or what passes for it. This is an IPE blog still at the end of the day.)