Working-level talks began Monday about the global currency dispute and balanced development, the main issues to be covered during the G20 Summit in Seoul on Thursday and Friday. U.S. Treasury Under Secretary Lael Brainard, Chinese Vice Finance Minister Zhu Guangyao and Korea's Deputy Finance Minister Shin Je-yoon are among G20 vice finance ministers who began negotiations at COEX in southern Seoul that will last until Friday morning when the summit ends.
On Tuesday, G20 officials overseeing the agenda including Michael Froman from the U.S. and China's Cui Tiankai also gather at COEX. They will play key roles in working out a final draft of a declaration prepared by Korea, about how to resolve the currency war, create an international financial safety net and support developing countries.
The main sticking point is likely to be the creation of concrete guidelines to resolve the current account imbalance between the U.S. and China. Intense debate is expected over the inclusion of requirements to cap a country's current account surplus or deficit within a certain level of its GDP. The Korean government believes G20 leaders should discuss a cap at +/-4 percent of GDP, but Germany, Brazil and other countries oppose that.
A draft declaration written by the Korean government includes an action plan with guidelines for G20 member countries on fiscal and foreign exchange policies, as well as clauses reconfirming a "standstill" agreement on halting protectionist measures.