November 13, 2010
Australian Prime Minister, JULIA GILLARD has urged her fellow world leaders to display ''maximum unity'' against a rising tide of protectionist sentiment and civil unrest as the developed and developing world recovers from the global financial crisis.
The Group of 20 leaders agreed to an anti-protectionist and pro-free trade stance in the communique released after yesterday's summit in South Korea, but Ms Gillard urged vigilance over the next several years.
The leaders also took a step towards ending the currency wars which has led to accusations of currency manipulation between G20 nations.
Advertisement: Story continues below On Thursday night and again yesterday, Ms Gillard told the leaders, including the US President, Barack Obama, and the Chinese President, Hu Jintao, that G20 nations had resisted protectionism during the crisis, but as the world recovered, protectionist pressures and civil unrest would increase.
''Sluggish growth, high unemployment, dramatic budget cuts … is a recipe for rising protectionist sentiment and we can't afford to have it break out.''
Australia would suffer badly from an outbreak of protectionism ''because we are a trading nation''. She cited the early examples of pressures within nations hit badly by the financial crisis, including the rise of protectionist Tea Party Republicans in the US. She noted also that harsh budget cuts in Britain had caused student riots there, and in France there are pension riots.
The G20 nations agreed in the communique to move towards market-based exchange rates and to refrain from competitive devaluation of currencies. The Chinese, who fix their currency at artificially low levels, resisted a move to change that to ''competitive undervaluation''.
However, China did agree to the G20 finance ministers, including the Australian Treasurer, Wayne Swan, assessing the veracity of each other's trade balances and deficits.
Member nations with artificially induced balances, such as China's large trade surplus, would be pressured to adopt structural changes, such as floating their currency. The assessments will be done under guidelines to be established by mid next year.
As expected, the G20 signed off on new rules and regulations for banks to insulate against another financial collapse.These must be implemented by 2015. Reforms to the International Monetary Fund were also agreed to, including more than doubling its resources to $US750 billion and giving developing nations, which are major contributors, more of a decision-making role.
The communique renewed a commitment to achieving the elusive Doha free trade deal as early as next year. Ms Gillard said 2011 was an ideal political window for the attempt to be made to clinch the deal, given the US midterm elections were over and the presidential election was not due until 2012.
Ms Gillard and most of the G20 leaders were due to fly to Japan last night for the Asia-Pacific Economic Co-operation summit. Australia will use the summit to keep momentum going towards free trade.
She will have a bilateral meeting today with Mr Obama. Afghanistan will be the major topic. Both leaders will attend next weekend's NATO summit in Lisbon, Portugal, where an exit strategy from the decade-old war will be discussed.