G-20 SUMMITGlobalization

Day 9 Mini Lesson

OBJECTIVES Students will identify purpose of G-20. Students will explain issues surrounding

currency wars and trade imbalances. Students will examine impact of PIGS on

Eurozone. Students will evaluate successes and

failures of latest summit.

WARM UP

Name an international organization that oversees globalization issues.

IMF World Bank WTO G7/G8 G-20

G-20 SUMMIT LESS THAN DISASTER

As you read the article, identify what questions you need answered to understand the recent G-20 summit.

http://www.nytimes.com/2010/11/13/world/asia/13assess.html?src=mv

What is the Group of 20?

What is the friction surrounding trade & currencies?

What real issue did these detract from?

Why isn’t Russia in the WTO?

Successes/Failures of Seoul summit?

WHAT IS THE GROUP OF 20? Leaders of the world's major developed

and developing countries as well as international institutions Finance ministers of 19 nations & EU,

leaders IMF and World BankUN, AU, ASEAN, WTO

G-20 economies comprise 85% of global GNP and 80% of world trade.

WHAT’S THE FRICTION ABOUT? Trade

imbalances US wants

restrictions on the size of trade surpluses and deficits with one another

Currency wars http://www.bbc.c

o.uk/news/business-11722578

US wants China to float yuan / RMB Set consistently lower than

value of US $, keeping goods cheaper

http://www.onemint.com/2009/01/26/how-does-china-manipulate-its-currency/

.

Allowing market to dictate value would shrink trade deficit by encouraging domestic sales, not exports

US position undermined by Fed’s $600b infusion Weakens value of US dollar,

importers make less (protectionist)

WHY ISN’T RUSSIA IN THE WTO? Largest economy outside of WTO

20 yrs unsuccessful attempts Issues with US (poultry, IPR & encryption)

and EU (timber)US will encourage Georgia not to use veto

to block entry (political / border dispute)

PIGS – THE REAL ISSUE European Sovereign Debt Crisis

Portugal, Ireland, Italy, Greece, Spain Run large deficits Default on loans = insolvency for Euro banks

(can’t collect large amts of $ owed)

Ireland negotiations… Crashing economy

Poor lending practices, stagnant econ, housing crash, lack EU regulations

Refusal to take European Central Bank rescue loanKnow can’t pay it backDon’t want to give up econ/poly control

SUCCESSES/FAILURES IMF will investigate

sources and consequences of imbalances.

Agreements on overhauling financial regulations.

Agreements on improving dvpt assistance for poor countries.

Agree to avoid competitive devaluation

US Failure to close free trade agreement with South Korea

Resistance from China & Germany over reducing trade surpluses.

CLOSURE

What is role of G20 in global economy?

Deal with financial and economic crisis

Set policies for growth & stability

Combat terrorist financing