G-20 draft focuses on free trade, protectionism

A draft communique on G-20 said that the world economy is facing the greatest challenge in modern times, a crisis affecting the lives of ordinary men, women, and children around the world, which requires a global solution.''World trade is falling for the first time in. We reaffirm the commitment made in Washington not to raise new barriers to investment or to trade in goods and services, including within existing WTO limits, not to impose new trade restrictions, and not to create new subsidies to exports,'' the draft statement said.

The leaders of G-20 leading and emerging nations will also refrain from currency moves that would hurt each other's economies.

Following talks with Mexican president Felipe Calderon, British prime minister Gordon Brown promised to do everything he can over the next few days to enable an agreement between all participants at the crucial summit.

He said that the meeting came at "a decisive moment for the world economy" and he was sure that leaders of the world's 20 most powerful economies want to come together to fight back against recession.

Major nations had already taken their own fiscal stimulus measures; in London they "will want to monitor very closely the global impact and consider whether further action may be warranted".

The Obama administration urged foreign governments to spend up rather than freeloading on the back of Washington's fiscal boost, and as recently as last week Brown was raising expectations of such an agreement by declaring, "We will also see next week the biggest ... co-ordinated fiscal stimulus that the world has ever seen."

But Germany, France and others say they will make their own spending decisions and that any further measure should wait until the impact of past spending is clear, leaving Obama and Brown playing down expectations.

The priority now for Brown, Obama and the rest of the leaders at the summit is to emerge from 4 1/2 hours of talks on Thursday and declare they are united.

Obama in an interview stressed the need for leaders attending the G20 to "deliver a strong message of unity" for the sake of the world economy. Brown made a similar point in his Evening Standard article, saying that the London summit was "the chance to show that we can work together".

The communique also noted that ''emerging and developing countries, which have been the engine of recent world growth, are now facing shocks which threaten stability and jeopardise the global economy. It is imperative that capital continues to flow to them.''

The draft said that G-20 will agree to make resources available to these countries through the international financial institutions, such as IMF and World Bank.

''This will finance counter-cyclical spending, bank recapitalisation, infrastructure, trade finance, debt rollover, and social support.''

Downing Street yesterday said that a further meeting of the G-20 could be necessary later this year because the London summit will leave significant issues unresolved.

Silvio Berlusconi, the Italian prime minister, has already suggested the G20 leaders meet again in Sardinia in July at the end of the scheduled G-8 summit.

The G-20 normally only meets at finance minster level, and Thursday's meeting will mark only the second time that it has assembled at heads of government level.

Managing media for vote
The world leaders are also concentrating on managing media expectations so they can declare the 2 April summit a grand success, with the added aim of showing their own voters that they are playing crucial role in the shaping up of the summit.

Australian prime minister Kevin Rudd said last night at a news conference with Brown that the spending initiatives being taken by individual governments around the world to bail out their economies had actually been "in response to the call" by the last G20 summit for co-ordinated action.

Brown last week spoke about his contacts with foreign leaders including Barack Obama, Canadian prime minister Stephen Harper and leaders from Europe, Latin America, India, Japan and China.