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NAM: G20 Agreement No 'Magic Wand'

G20 finance ministers have agreed on currency and global rebalancing, but NAM says challenges remain with implementation and coordination.

WASHINGTON -- The finance ministers of the Group of 20 (G20) have agreed on currency and global rebalancing. The National Association of Manufacturers (NAM) says that while this is a step in the right direction, challenges remain with implementation and coordination.

NAM's Vice President for International Economic Affairs Frank Vargo commented on the agreement:

“The agreement over the weekend from the G20 finance ministers establishes the necessary framework, but is in no way a magic wand to resolve the underlying problems. The G20’s effort to obtain a multilateral solution to currency problems is essential, but we believe it cannot be seen as the only way to press China to appreciate its currency.

While it is positive that G20 leaders have recognized the seriousness of today’s trade imbalances and that a multilateral agreement is preferable to unilateral action, the key to success remains the implementation of these principles and continued coordination. Large surplus countries like China and Germany need to increase domestic demand and move away from an economic model dependent on exports for growth, and large deficit economies like the United States and some European countries need to take steps to save and export more.

This will not be easy, as there are conflicting priorities within countries. While a new architecture is being constructed, we hope the United States will be joined vocally by the other members of the G20 in calling for China to accelerate its currency appreciation.”

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