EU calls for coordinated action within the G20 in order to tackle imbalances

On the preliminary of the G20 Summit held in Seoul (South Korea) between 11 and 12 November, the European Union passed its key message to its partners in the Summit which is based on the need for coordinated action to the collective challenge the world is facing. In their addresses, President Van Rompuy and President Barroso expressed what are the main expectations the European Union holds for this Summit.

The G20 is holding its fifth leaders' summit in Seoul, South Korea, to discuss the state of the global economy as it emerges from the financial crisis. The G20 was designated the premier forum for international economic cooperation at the Pittsburgh Summit in 2009 where participants agreed on the short term goal of building on the economic recovery and enhancing international cooperation to generate strong, sustainable growth.

Prior to the Seoul Summit, President Barroso and President Van Rompuy addressed a letter to the G20 Leaders expressing the EU's position on the different elements of the agenda, reflecting as it is usual a single message from the European Union as prepared by the European Council.

President Barroso defined the Seoul Summit as a credibility test, where the question is how far participants can go at this Summit to agree on joint action in order to boost global growth and jobs. Although current economic situation is better than in late 2008, when G20 was launched, and growth prospects have improved, recovery is uneven and unemployment is still very high. Therefore, growth and jobs should be at the centre of concerns of the participants in the G20.

The world needs to accelerate and rebalance growth in a way that it is good for all, and the G20 is delivering on this. Once information is exchanged and mutual assessment engaged, it is now time to go further and implement the framework for growth. The G20 has prevented the boat from sinking and now it must show that it is indeed the premier forum for global economic cooperation.

As President Van Rompuy also stated the growth projections in the Union and in the Euro area are double as high as expected six months ago but it is a multi-speed recovery. Van Rompuy highlighted that most Member States are successfully implementing major reform, both on the fiscal side and on the structural one. The Union believes that there will be a positive spill-over effect to other Member States and confident in the capacity for some Member States having problems to overcome them. “Each country and region has its specific situation, but we are all in the same boat”, said President Van Rompuy

EU's expectations for the G20 Seoul Summit

In this context President Barroso was clear that G20 must tackle imbalances decisively and all major economies must to do their part to achieve rebalancing. And in doing so, they should consider the consequences of their action or in-action on other countries. It is necessary to develop and use effective tools to detect, assess and reduce excessive imbalances.

President Van Rompuy stressed the need for coordination in these actions, both for imbalances and for exchange rates, two of the main topics to be addressed in Seoul. It is important to avoid currency wars as to avoid protectionism. Once again coordination and a strong sense of responsibility is needed for the world economy as a whole. In this respect, completing the Doha Round should remain a top priority.

Some other key topics such as the reform of the International financial Institutions (IFIs) and the Financial regulatory reform, the support to the new agreement on capital and liquidity standards (Basel III) will also be on the agenda for debate within the Seoul Summit.