G20 role/relevance to citizens – WTO and IMF
Paris, February 16, 2011
G20 ROLE/RELEVANCE TO CITIZENS
Q. – With the crisis behind us, is the G20 – created at the very height of the financial storm – still useful?
THE MINISTER – What we want is precisely to avoid getting back into a systemic crisis that puts countries in danger. Let’s not forget that the events of 2008 pushed us to the edge of the abyss. Hence the need – even today – to address the structural causes of the imbalances and define a framework for strong, lasting and balanced growth. Now, it’s true the G20 is in its consolidation phase. This year, under the French Presidency’s impetus, we must succeed in making it representative and effective, making it an organization everyone feels they own, which manages to act, as was the case with financial regulation. Otherwise the G20 will return to what it was previously: a nice debating club for well-bred people.
Q. – Reform of the monetary system and the commodities markets, international governance… These subjects seem distant from citizens’ daily lives. How can you make them understand the importance of these challenges?
THE MINISTER – All this seems technical, sophisticated and reserved for the éminences grises; but in reality, if we want to prevent imbalances and excesses, it’s precisely for them [citizens] that we’re working. One example: should we let cereal prices suddenly rise by 70% because a rumour indicates production is going to fall by 3%? Even if the impact of the flour price on baguette prices isn’t huge, it inevitably brings about inflation, not to mention the impact on producers. How can a farmer who doesn’t know the price of his harvest make a living or invest? Not all countries agree with the battle we want to fight against price volatility; it’s natural; everyone takes the stance of defending their own interests. It’s up to us to persuade them.
ECONOMIC INDICATORS/WTO AND IMF
Q. – Paris wants to persuade its partners to define common economic indicators. Which ones, and why?
THE MINISTER – The negotiations are beginning and there’s no agreement at this stage. I’d like us to reach agreement on current account indicators in the broad sense – trade, services and payments – as well as indicators of public finances, savings and investment. The logic is very simple: a trade surplus, for example, means one country sells a lot of products to another, which has a deficit. They’re both linked, and it’s in nobody’s interest for the gap to be excessive, because that would damage global growth. We must set common indicators and subsequently go on to quantify their ideal limits. It won’t be easy, but it’s essential in order to correct future imbalances before they spark a new systemic crisis.
Q. – Exporters suffer from the currency volatility, which puts their competitiveness at a disadvantage. Shouldn’t a link be made between trade and monetary issues, between the WTO and IMF?
THE MINISTER – Indeed. Moreover, when the WTO bodies ask themselves whether such-and-such a country is guilty of trade protectionism, they look at whether it’s linked to an exchange-rate problem. The statutes of the WTO and IMF explicitly envisage this, but it’s never been put into practice, although Pascal Lamy, the WTO’s Director-General, talked about it at the G20 in Korea. It would seem no country dares make too great a commitment in this area.
Q. – Does the trade regulation for which the WTO is responsible work better than international supervision of currencies?
THE MINISTER – Yes, because trade regulation is matched by sanctions. The WTO has its own conflict resolution mechanisms, whereas there’s no equivalent for exchange rates. The IMF has a duty of supervision, it distributes its financial aid to countries in difficulty, but it doesn’t have an arbitration chamber, unlike the WTO, which can arbitrate disputes.
LAGARDE’S ROLE/COST OF G20 MEETING
Q. – As Chair of the meeting, is it your role to persuade?
THE MINISTER – Important work has been done in advance to iron out disagreements on the different subjects. There’s much more tension in chairing a G20 than when you’re just participating. The idea is that, when the weekend is over, no country should have the finger pointed at it and we should have solid foundations for the work of the G20 Heads of States’ meeting to be held in Cannes in November.
Q. – How much will it cost to host this G20 finance ministers’ meeting in Paris?
THE MINISTER – Altogether it comes to €2.7 million, half of it taken from the Ministry’s budget and half from that of the Bank of France. The bulk of the expenditure is on providing facilities to receive delegations and journalists from all over the world. The security costs aren’t negligible, either./.