High trade deficits will be in focus at G-20 meet
Mail Today Bureau November 9, 2010
US President Barack Obama on Monday said the issue of distortions in international trade, which have led to major economic imbalances, would be discussed by world leaders at the G- 20 meeting in Seoul next week.
The US has an over $200 bn annual trade deficit with China, which it attributes to the low value of the yuan deliberately fixed by the Chinese government. This undervaluation of the yuan makes Chinese goods cheaper and US goods more expensive and American industry gets hit due to the distortion in trade.
"When we go to the G-20, we are going to talk about a host of issues, including how do we start creating balanced and sustainable growth... How do we make sure that countries that may have extended themselves for a long time start getting their houses in order," Obama said in a joint press conference with Prime Minister Manmohan Singh.
Obama emphasised that his country has no complaints against India as far as trade balance is concerned. The India-US trade of $36.6 billion is balanced. In 2009, India exported goods worth $19.53 billion to the US and imported American goods worth $16.97 billion.
"I should point out that India is a part of the solution and not part of the problem... Generally, there is a balanced growth pattern with respect to India... We have got excellent trade ties with India," he said.
Obama had said in Mumbai on Sunday that India needs to lower its trade barriers in order to give more access to US goods.
The US is looking for India's support on the yuan issue which has been termed a "currency war" in the international media. India has been taking the stand that the issue has to be settled through a consensus and no country should be forced to change the value of its currency.
Manmohan Singh said he has an expectation from the G-20 meeting in Seoul for working towards a balanced global trade.