Yves Logghe, Associated Press
BRUSSELS — Export champion Germany said Tuesday that trade surpluses should not be targeted in the same way as deficits, a sign that the Group of 20 rich and developing countries are likely to clash over how to smooth out global imbalances when they meet this week.
Like the G-20, the European Union is trying to even out trade flows, claiming large surpluses by some eurozone nations helped fuel bubbles in deficit countries and contributed to the debt crisis that has crippled the region over the past year.
The EU says surplus countries like Germany should boost internal demand — that is, spending by companies and households— which would raise exports from other countries. At the same time, many economists argue that German banks invested the huge capital surpluses amassed by savers and export companies in overheating economies such as Ireland or Spain, leaving the lenders with dangerous exposures to now-struggling countries.
But Germany, which like China has been exporting much more than it has been importing in recent years, rejects any claims that its strong export policies are fueling dangerous imbalances.
"One has to clearly distinguish deficits from surpluses," German Finance Minister Wolfgang Schaeuble said at the sidelines of a meeting of European finance ministers in Brussels.
He said Germany's surplus was "not an obstacle to growth in other countries. Instead we are to some degree assuming the function of a locomotive for the euro area."
The debate over global imbalances lost some of its momentum after a meeting of G20 leaders in Soul last year failed to come up with clear commitments.
However, French Finance Minister Christine Lagarde said this week that when G20 finance ministers meet in Paris Friday and Saturday, her country will aim to reach an agreement on a list of indicators that can be used to measure imbalances.
That was one of the key takeaways from the last G-20 meeting in Seoul in November. The next step will be to agree on numerical thresholds for the indicators that will serve as alarm bells when imbalances get too large.
The European Commission, the EU's executive, meanwhile, is struggling to come up with its own scoreboard for macroeconomic imbalances in the eurozone, which it says will help prevent another debt crisis in the future. In contrast to Greece, which for years surpassed the EU's limits on budget deficits, Ireland and Spain kept their public spending in check, but private households and companies piled on huge debts.
Germany argues that rather than punishing countries with strong economies by trying to reduce surpluses, weaker states should make their economies more competitive — something it is currently trying to achieve in the 17-country eurozone with a so-called "pact for competitiveness."
However, the pact, backed by Paris, has run into opposition from other eurozone governments, who fear that it will interfere in their sovereignty and distract from other efforts to keep spending and imbalances in check championed by the European Commission.
Schaeuble said Tuesday that discussions over the demands that will be included in the pact are neither "exclusive nor concluded," but according to documents circulated a few weeks ago they could require introducing automatic limits to public debt into national constitutions, raise retirement ages and coming up with a common base for corporate taxation.
To further discussions on competitiveness, Finland's Finance Minister Jyrki Katainen on Monday invited Europe's conservative heads of government to Helsinki on March 4 ahead of a summit focused on the pact a week later. It wasn't clear Tuesday how many leaders have accepted.
Matti Huuhtanen in Helsinki contributed to this article.
- Religious groups react to Boy Scouts’...
- LDS Church 're-evaluating' Scouting program...
- Which U.S. cities are the best for upward...
- With Boston out, another Salt Lake Olympics...
- George Washington University joins other...
- Boy Scout board approves end to blanket ban...
- Are lawsuits ahead for church-based Boy Scout...
- American being sought for lion poaching with...
- LDS Church 're-evaluating' Scouting... 101
- Boy Scout board approves end to blanket... 70
- Religious groups react to Boy... 60
- Are lawsuits ahead for church-based Boy... 30
- 2016 Republicans use Trump, TV to make... 26
- Obama: Republican criticism of Iran... 25
- Oklahoma Supreme Court: Ten... 25
- Covered California: Cost of health care... 15