As world leaders of 20 countries (G-20) representing 85% of the world’s economy gathered in Washington to discuss about the global financial crisis, one thing that they have agreed on is a joint approach to tackle the economy. The inclusion of developing countries have been an innovative and welcomed push to get more developing countries involved in saving the world economy.
But a divide has broken out between the Europeans and the Americans. Europeans want more state control over market and giving government regulators cross border cross boundary powers while the US wants to keep regulation within national boundaries.
The Europeans have proposed setting up colleges of supervisors that will meets regularly to share and exchange information about global bank operations across borders and also expand the membership of the Financial stability Forum group of finance ministers and central bankers to include developing countries membership (especially large developing economies like China and Brazil).
Such proposals are opposed by the Americans. With such early deadlocks, it is likely that Japan, China and countries like Saudi Arabia may end up as possible tipping points for any disagreements. Japan for example is taking the lead in providing US$100 billion to the IMF and is pushing other countries to contribute similar amounts to do the same.
But Asian countries are also getting nervous about rising calls for protectionism within the developed world. The EU has also slapped anti-dumping duties on Chinese-made candles and non-alloy steel products of up to 60% which accounted for US$380.6 million of the EU market, worth US$1 billion in 2007. Extra duties of up to 50% will be levied on non-alloy steel wire products from China for half a year starting from November 2008.
One of Southeast Asia’s G-20 representative, Indonesia, meanwhile has called for a strategic partnership with the US to confront challenges in the 21st century and focuses on equal partnership and common interests as elements of US-developing world relations.
AFP, “Yudhoyono calls for partnership with US” in the Straits Times dated 16 November 2008 (Singapore: Straits Times), 2008, p. 23.
Ennis, Darren, “Duties Slapped on China Goods as G-20 Meets” in the Cambodia Daily dated 17 November 2008 (Cambodia: Cambodia Daily), 2008, p. 33.
Landler, Mark, “World Leaders Vow Joint Push on Economy” in the Cambodia Daily dated 17 November 2008 (Cambodia: Cambodia Daily), 2008, p. 1.