G-20 leaders’ discussion could improve international trade

The G-20 Summit could translate… The G-20 Summit could translate into cheaper products and tighter loan restrictions for students.

But, it will also be about putting on a diplomatic show, some Pitt professors say.

James Cassing, a professor in Pitt’s economics department, said that the U.S. stands to gain a lot in the long run by hosting the G-20, a Sept. 24-25 meeting of leaders from 19 countries and the European Union. Together, the leaders represent 85 percent of the world economy.

Cassing also said that the diplomats attending the meeting will likely discuss the same issues that they did the last time they met in London this past April.

That means they’ll inevitably talk about trade.

One of the first decisions the G-20 made was to allow the World Trade Organization to monitor increases in the restrictions countries place on trade. The World Trade Organization can label new trade restrictions “protectionist measures,” meaning that the country is restricting trade to protect its own market.

“The U.S. has traditionally kept low trade barriers,” Cassing said.

But, if the country can convince Chinese leaders to loosen their trade restrictions, the volume of trade would increase, making Chinese goods in general cheaper for Americans.

Cassing said he expects G-20 leaders to also debate the best ways to oversee and prevent another financial collapse.

Representatives from the EU would like nations to place more restrictions on their financial institutions than the United States currently does.

Douglas Branson, a Pitt law professor, said additional oversight would most likely put a limit on “risk,” which could decrease the ability of banks to lend money to their patrons.

“It could eventually affect the little guy,” he said. “It’s still very hard for individual people to get loans.”

Increased oversight could also require the U.S. government to tell institutions where they can invest their money, which could conflict with some civil liberties offered in the United States.

Cassing said he also expects the leaders to brainstorm ways to curb inflation, which could rise after all of the stimulus money has made its way into the economy. A rise in inflation could choke off the recovery of economy, according to a report from the University of Toronto.

A rise in inflation would mean too much money chasing too few goods in the economy. This would destabilize prices at a time when it’s much better for prices to be stabilized, said Cassing.

He added that it’s possible the Summit leaders will discuss “green” technology, but he doesn’t think it will be a highlight of the meeting.

“I don’t expect any blockbuster announcements,” Cassing said. There may be a mention of continuing commitments to green technology and the environment, but no major initiatives, he said.