Indeed, the United States government priority is the reduction of global imbalances. And President Barack Obama wants G20 nations to commit on boosting consumption in exporting countries while encouraging debt-laden nations to save more. This sounds like a good idea but is very difficult to make the Chinese to spend more and Americans to save more.
Germany and France’s agenda is quite different. They want to focus on financial regulations asking for changes in banker’s compensation rather than higher capital requirements. In fact, German Chancellor Angela Merkel, speaking in Berlin, almost accused the US and the UK of turning back on the issues of financial market regulation by putting the spotlight on the export-oriented economic policies of Germany and China.
In our opinion, the G20 needs to focus only one issue, protectionism. Indeed, during the last G20 meeting in Washington all leaders declared to reject protectionism and implementation of new barriers to investment or to trade in goods and services. However, since then every government has been bending or breaking international rules on subsidies and import barriers to protect jobs. To make things even worst, on the eve of the Pittsburgh summit, US raised tariffs on Chinese tires, prompting Chinese to pledged dumping and subsidy probes of chicken and auto products from the US.