As the Group of 20 summit opened Thursday in Seoul, the failure between the U.S and South Korea to reach a trade deal underscored doubts that the summit can reverse the lingering fallout from the global financial crisis.
The failure was a major blow to President Barack Obama, who made the negotiations to expand American exports of cars and beef a high point of his 10-day Asia trip. Both sides agreed to continue negotiating.
“We need to make sure that over the next several weeks, we are crossing all the t’s, dotting all the i’s, being able to make the case to both the Korean people and the United States population that this is good for both countries,” Obama said.
Among the G20’s main goals during the two-day summit is to soothe exchange rate tensions caused by imbalances between cash-rich exporting nations and debt-burdened importers. At heart of this dispute is China and the U.S. manipulating their currencies and triggering protectionist policies that could spark another global recession.
Some analysts worry that failure at the summit will spark a currency war, with countries devaluing their own money to benefit their exporters in the world market.
Though Obama was confident, other leaders were skeptical.
“The persistence of these imbalances is a problem in the long term,” said Canadian Prime Minister Stephen Harper. “Will they be addressed at this conference? I’m not so sure, but I think we’re getting a more frank discussion.”
The Federal Reserve’s plan to pump $600 billion in bonds into the U.S. economy, weakening the dollar, also irked some leaders, who fear it will trigger a flood of money and boost inflation and asset prices.