US won’t seek 4 pct trade imbalance target-Geithner

By David Lawder

KYOTO, Japan, Nov 6 (BestGrowthStock) – So does the United States
want a numerical target for trade imbalances or not?

The question was thrown at U.S. Treasury Secretary Timothy
Geithner from multiple angles on Saturday after a meeting of
finance chiefs from the Asia-Pacific Economic Cooperation
countries.

The answer, roughly: No, but we’re still working on it.

Geithner denied widespread reports among media that the
United States was pushing for Group of 20 leaders in Seoul to
endorse a plan next week to limit their countries’ current
account surpluses and deficits to about 4 percent of gross
domestic product.

“That is not our intention,” Geithner told Japanese newspaper
reporters. “What our intention is, is to keep trying to build
support for this and to allow the experts to do the detailed hard
work, to build a framework that people will have some confidence
in over time.

“There’s nothing on the table except for ‘indicative
guidelines,'” he added.

APEC finance ministers in a statement after the meeting
endorsed language agreed by the G20 finance ministers last month
in Gyeongju, South Korea, to maintain current account imbalances
at sustainable levels as a means to promote balanced growth.

The United States wants to establish a method to measure when
imbalances can cause problems in the global trading system and
become unsustainable. Geithner called it an “early warning
system” that might indicate adjustments in policies are needed.

Geithner said one of the other G20 member countries put
forward a 4 percent of GDP figure as an idea of where several
large countries were headed, including China, which had a current
account surplus of around 9 percent of GDP in 2008.

The 4 percent level quickly gained traction in the media. The
U.S. Treasury chief himself endorsed that level as a “benchmark
for the future” in a Bloomberg Television interview after the
Gyeongju meeting.

But in Kyoto, Geithner spent considerable effort distancing
himself from a single numerical target for current account
imbalances.

At a news conference, he said reducing large external
imbalances was “not amenable to limits or targets”.

Circumstances are very different for commodity exporting
countries or small countries with a large share of trade as a
component of GDP, he said.

“How do you judge what’s excessive? There is no single number
that makes sense for countries across time,” he said.

Another senior U.S. Treasury official said later that a lot
of technical work needs to be done before “indicative guidelines”
for sustainable current account deficits and surpluses can be
defined.

There are many factors that will go into defining what is a
sustainable path for an economy, including how government
policies affect savings and investment decisions and currency
movements, among other things.

It is far too soon for G20 heads of state to consider
specific language on guidelines for imbalances, the official
said.
(Editing by Michael Watson)

US won’t seek 4 pct trade imbalance target-Geithner