The President said he was not disappointed with the Summit outcome as “we have broad agreement on the way forward” and the “Seoul Action Plan” sets out, for the first time, actions required to achieve strong, sustained and balanced growth. In a letter to heads of government ahead of the Summit, President Obama had suggested that a rebalancing of the sources of global demand, along with “market determination of exchange rates that reverses significant undervaluation, are the best base for the shifts needed to bring about the vigorous and well-balanced recovery”.

While the United States holds China's currency being kept under-valued to gain undue competitive advantage, China, Germany and other emerging nations joined to blame US monetary policy for the exchange rate turmoils, as the Federal Reserve's decision to inject 600 billion dollars over coming months to boost American economy was driving down the dollar vis-à-vis other currencies. The Seoul Action Plan says countries should move toward more market-oriented exchange rate systems, enhancing flexibility and refrain from competitive devaluation while advanced economies, especially those with reserve currencies, would guard against disorderly movements in exchange rates.

The “under-valuation” is not cited, and so China happily goes along with the consensus. Germany, the second largest exporter after China had taken up the cudgels against USA charging it with trying to take advantage of a cheaper currency for export. The Obama Administration had been building up a momentum for G-20 action on under-valued currencies. Finance Ministers of G-20 had last month rejected US proposal for a target for current account balances.

The Mutual Adjustment Process (MAP), which G-20had earlier agreed on, is yet to have a mechanism through “indicative guidelines” for identification of large imbalances in any country that require “preventive and corrective actions”. These guidelines have to be developed by IMF and other organizations and would then be proposed to G-20 Finance Ministers in the first half of 2011.

The first such assessment on currency imbalances, as part of MAP, based on indicative guidelines would then be initiated and undertaken under the French Presidency of G-20 in 2011. Thus, in effect, the present controversies over exchange rates are sought to be put on hold. Events in coming weeks and months can alter the balance and revive trade tensions and protectionism.

Summing up his Asian tour, President Obama said countries he has travelled through are “eager to work with and engage America on economic and security issues and on a whole range of mutual interests”. In Asia with enormous potential and being the fastest growing part of the world, “we have got to be here and we have got to work”. His administration would over the next two years would continue to make progress in ensuring that United States has a presence here for decades to come.

Mr Obama rejected suggestions that US midterm elections with Republicans taking control of the House of Representatives had “weakened” his Presidency at home or abroad. He noted America had to compete in the Asia-pacific region in a changing world where rapidly growing nations were becoming “more assertive of their interests and ideas”.

Tangible gains for the American economy could be had only in India, the first stop of the President, and to some extent in Indonesia. But his Asia visit would now go into background as immediately he begins grappling with contentious tax cuts, fiscal discipline and growth and job issues with Republicans having their own divergent approaches.

The positive outcome of G-20 Summit is that it avoided a collision course and re-established a spirit of consensus though actions of different countries would vary according to their own circumstances except that in areas which have a spill-over effect, they would be cautioned by the disciplines embodied in the Mutual Adjustment Process.

President Obama and China's President Hu Jintao met in Seoul when they discussed exchange rates. China has taken the stand that it would gradually move to market-determined exchange rates while aiming at stability of its currency. Mr Obama said his administration would continue to closely watch the appreciation of China's currency and he was hopeful that China would begin a gradual transition. President Hu is to visit Washington early in the New Year.

Both at G-20 Summit and the 21-nation APEC Leaders meeting in Yokohama (Japan), President Hu said that China would seek to expand domestic demand and remain committed to reforming its exchange rate. China would make “vigorous efforts to establish effective means for expanding domestic demand, especially consumer demand” and contribute to global balancing of payments.

By and large G-20 countries have not resorted to pronouncedly protectionist measures in trade or investments, according to OECD/UNCTAD reports. The Seoul Declaration reaffirms commitment of G-20 nations to keep markets open and liberalise trade and investment as a means to promote economic progress for all and narrow development gaps. The Summit directed their negotiators in Geneva to engage in across-the-board negotiations to promptly bring the Doha Development Round, ambitious and comprehensive in scope, to a successful conclusion in 2011. (IPA Service)