• U.S. Outlines Goals for Upcoming Toronto Summit, as EU Leaders Issue Open Letter to G-20 Leaders
  • July 2, 2010
  • Law Firm: Alston Bird LLP - Atlanta Office
  • On Tuesday, in advance of the G-20 Summit to be held in Toronto this weekend, U.S. Treasury Secretary Timothy Geithner and Director of the National Economic Council Larry Summers published an op-ed in the Wall Street Journal outlining their agenda at the Toronto Summit and “highlight[ing] the importance of the G-20 in building a united approach to global economic recovery." Separately, European Council President Herman Van Rompuy and European Commission President José Manuel Barroso issued an open letter to G-20 leaders urging leaders to, among other things, reaffirm their commitments "to reform financial markets in a consistent and coordinated manner on the whole range of actions agreed upon in Pittsburgh.”

    Secretary Geithner and Director Summers described three top priorities that will be the center of the United States' agenda at the Summit:

    • The G-20 countries must “ensure that global demand is both strong and balanced” and "rest[s] on many pillars going forward." They emphasize that the G-20 must "support Europe's reform program and the financing that Europe and the IMF will provide to countries facing acute fiscal challenges" and that, although there "is a broad consensus about the importance of fiscal sustainability, ... the precise timing and sequencing of that consolidation should vary across countries and be calibrated to maintain the momentum of private sector recovery."
    • The G-20 countries should accelerate “efforts to establish a global framework for financial regulation,” including reaching "agreement internationally on reducing leverage and raising capital requirements, improving both the quantity and quality of capital." They note that "new measures must be phased in over time so as not to interfere with the flow of credit," but emphasize that "establishing those rules now can be an important source of certainty and confidence."
    • The G-20 needs to address “other global challenges that are essential to the future security and prosperity of the world,” including "our common commitment to raise living standards across developing countries and to make smarter investments in areas like agricultural development and food security" and "the urgent challenge of our energy needs, as the current disaster in the Gulf makes clear."

    The Van Rumpoy/Barroso letter outlines some of the key deliverables identified last month in President Barroso’s letter to President Van Rompuy, members of the European Council and to European Parliament President Jerzy Buzek, with respect to the upcoming Toronto Summit, in addition to some of the key deliverables raised at last week's meeting of the European Council. The deliverables include:

    • agreeing on a “coordinated and differentiated exit strategy to ensure sustainable public finances”;
    • addressing the issue of remuneration and measures to ensure that the strict compensation standards agreed upon last year are uniformly implemented; 
    • discussing how to best achieve global convergence on a set of high quality standards within the deadline agreed at Pittsburgh and how to “further improve the governance of International Accounting Standards Board”; 
    • continuing to improve “corporate governance in financial institutions and rigorous enforcement of financial regulations including rules on market abuse;” and 
    • discussing the implementation of “credible medium-term fiscal policy strategies” in order to address and decrease deficit and debt ratios and enhance greater exchange rate flexibility.

    In the letter, President Barroso and President Van Rompuy also noted that at the Toronto Summit the leaders should take into consideration that "international work on levies and taxes on financial institutions should continue to maintain a world-wide level playing field.” They also emphasized that the “introduction of a global financial transaction tax should be explored and developed further in that context.”

    Finally, the EU leaders called for the “completion of the reform of the International Monetary Fund as a single and comprehensive package by November 2010 and highlight[ed] the European Union’s determination to support the achievement of the Millennium Development Goals globally by 2015 and to achieve its development aid targets.”