APEC financial chiefs vow to cut global imbalances+

KYOTO, Nov. 6 Kyodo - Pacific Rim finance ministers pledged Saturday to make concerted efforts to address global trade imbalances, in a move that could put pressure on some
surplus members, including China, to move away from unfairly undervaluing their currencies as a way to boost exports.

The ministers of the 21-member Asia-Pacific Economic Cooperation forum, which
accounts for about 40 percent of world trade and more than half of the global
economic output, also vowed to avoid a currency war, emphasizing that foreign
exchange rates must be determined by markets and reflect economic fundamentals.
The communique released after their two-day meeting in Kyoto made clear that
some APEC members with external deficits, such as the United States, need to
undertake fiscal consolidation while supporting private savings, and that those
with surpluses, including Japan, should proceed with structural reforms to
strengthen domestic sources of growth.
APEC finance ministers 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,'' the joint statement said.
The APEC forum, a consensus-based body established in 1989, groups Australia,
Brunei, Canada, Chile, China, Hong Kong, Indonesia, Japan, South Korea,
Malaysia, Mexico, New Zealand, Papua New Guinea, Peru, the Philippines, Russia,
Singapore, Taiwan, Thailand, the United States and Vietnam.
The ministerial meeting was a preparatory session for the summit of APEC
leaders next week.
The move to encourage more balanced global economic growth came in line with
efforts made recently by the Group of 20, another forum encompassing both
advanced and emerging economies and which involves nine of the APEC members.
At a G-20 meeting last month in South Korea, U.S. Treasury Secretary Timothy
Geithner proposed that the members cap their current account surpluses and
deficits at 4 percent of GDP by 2015, only to face opposition from some
economies in surplus, including China and Germany.
The U.S. proposal, made ahead of the G-20 summit scheduled for Thursday and
Friday in Seoul, was widely seen as aimed at curtailing the huge trade surplus
of China, which keeps tight control of the yuan's exchange rate.
Ministers of the APEC forum, whose agreements on any policy action are
traditionally nonbinding, did not debate the sensitive issue intensely,
however.
''We did not discuss any numerical targets'' to reduce imbalances, Japanese
Finance Minister Yoshihiko Noda, who hosted the Kyoto meeting, said at a press
conference, while underlining that APEC and the G-20 share a ''baseline'' of
policies.
Even Geithner showed reluctance to press hard for his proposal at the Seoul
summit, in which the leaders will discuss ''indicative guidelines'' for the
imbalances.
''Our intention is to keep trying to build support for this (proposal) and to
allow experts to do detailed hard work to build a framework that people will
have some confidence (in),'' Geithner told reporters after the meeting, adding,
''That's going to take some time.''
The U.S. proposal has run into resistance from members of the Association of
Southeast Asian Nations, who cite the danger of promoting protectionism and
hampering free trade. ASEAN sent a note of their opinion to the United States
earlier in the day, Geithner said.
China, which has been at the center of currency disputes, did not send its
minister to Kyoto and is instead being represented by Vice Finance Minister
Wang Jun. The United States, spearheading international calls for Beijing to
allow the yuan to appreciate more rapidly against other currencies, sent
Geithner to the ancient Japanese capital.
APEC members ''will move toward more market-determined exchange rate systems
that reflect underlying economic fundamentals and will refrain from competitive
devaluation of currencies,'' the ministers also said.
The statement echoed the G-20's position agreed by its finance ministers and
central bank governors last month amid fears of a possible currency war, in
which countries race to devalue their currencies or control capital inflows as
a way to boost exports and employment.
The APEC financial chiefs also discussed how to secure finances to enhance
economic growth including in such areas as infrastructure, small and
medium-sized companies and tackling climate change, and adopted on Saturday a
''Kyoto Report on Growth Strategy and Finance.''
The report will be submitted to the summit of APEC leaders scheduled for Nov.
13-14 in Yokohama.
==Kyodo