Tuning discordant voices, a challenge for U.S., EU in Canada

08:42, June 28, 2010      

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At the G20 summit ongoing in Canada, the United States and European Union undoubtedly play overwhelming and critical roles in ushering the world to sustained growth and international financial reform.

However, as the two sides have brought different proposals to the decisive summit in Toronto, how to tune their discordant voices becomes a challenge, not only for the two, but also for the global economy.


According to the information published by the host country Canada, sustainable and balanced economic growth is one major topic of the summit, but how to succeed a sound growth, the Europe and the America own different views.

So far since the beginning of this year when the eurozone hit by the sovereign debt crisis, Germany and France, two biggest EU economies, gradually formed a united front line of taking austerity measures and cutting public deficit to solidify fiscal budget.

Germany Chancellor Angela Merkel stressed that Europe needed a healthy growth built on authentic economic fundamentals rather than debt-based growth.

The U.S. President Barack Obama, nevertheless, made a different voice ahead of the summit, underlining the priority of G20 summit should be to guarantee and boost economic recovery.

Obama called European countries to avoid too aggressive measures in tightening fiscal spending, in fear that austerity methods might stem world-wide growth and drag the resilience.

Michel Aglietta, a prestigious French economist with the Paris University, attributed U.S. and European discord to conflict between Keynesia and Mercantilism, in an interview with local media.

Facing a fragile recovery, the U.S. leaders see more hope in Keynesia, which means to take active fiscal stimulus to boost domestic demand in a bid to promote growth. They viewed tight fiscal policy not appropriate under the current weak rebound.

With an aging demography, Germany takes weak domestic demand as bigger threat, and thus preferred Mercantilism to edge its competitiveness and accumulate trade surplus.

The two opposite methods would amplify the international economic imbalance, Aglitta expressed his concerns.


In terms of international financial regulation, the United States and EU appeared in accordance, but there still existed nuance in regulating formats, particularly on global financial transaction levy.

France and Germany stand to levy financial transaction on international level, eyeing to form an assistance fund to offset potential bailout cost in the future, and to restrain banking groups from risky operations.
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