US Treasury Secretary Tim Geithner has written to his G20 colleagues suggesting that they should adopt a new approach to managing external trade imbalances. Specifically, he wants the G20 to agree to a limit on their current account surpluses and deficits over a period of years, and also to correct these imbalances if they seem likely to drift away from the agreed targets. This is a good idea, because multilateral action on global imbalances would be vastly preferable to a disorderly bilateral dispute between the US and China. But the Geithner plan, as currently drafted, is fraught with difficulties. Read more